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HEALTH

Spain considers extending furlough scheme until year’s end

Spain's Labour Minister Yolanda Diaz on Saturday suggested the government would extend its coronavirus furlough scheme for an extra three months until the end of the year.

Spain considers extending furlough scheme until year's end
Spain's Labour Minister Yolanda Diaz. Image: Mariscal / POOL / AFP

Speaking after talks in Majorca with the regional government and union bosses, Diaz said it would make no sense to drop the ERTE furlough scheme when it is scheduled to finish at the end of September.

“It would not make any sense to drop a protection system as important as the one designed by the government,” she said of a scheme which has benefited millions of people.

“There is no point in designing a mechanism that involves huge amounts of public resources then at the decisive moment… we drop it,” she said in comments broadcast on Spain's RNE radio.

READ MORE: How the UK's new quarantine rules are impacting travel to Spain

“The key is in the last quarter of the year,” Diaz said, indicating she wanted to send a “message of calm”.

“We are not going to remove anything.”

Her remarks came a day after Spain formally went into recession after its GDP fell by 18.5 percent in the second quarter.

A total of 3.7 million people benefited from the government's furlough scheme between mid-March and the end of May, labour ministry figures show.

The government also banned layoffs in the six months after the end of the furlough scheme, although cutbacks are expected.

A commitment to fund such temporary unemployment schemes was one of the key measures put in place by Prime Minister Pedro Sanchez's government to bolster an economy battered by months of lockdown.

The pandemic also destroyed more than a million jobs in Spain between April and June, mostly in the services and tourism sector.

Spain's unemployment rate, which jumped to 15.3 percent by the end of June, could rise as high as 19 percent by the year's end, the government has warned, while the IMF sees it rising to 20.8 percent.

Hard hit by the virus which has killed more than 28,400 people, Spain has been struggling with a spike in new infections that has sparked European travel warnings and a British quarantine move that has damaged the fledgling recovery of tourism.

Member comments

  1. In the deepest recession since the Civil War, with unprecedented unemployment even higher that the 2007 crash and the highest youth unemployment in the OECD how on earth can the Spanish government find the billions of euros necessary to make such lavish payments for another 3 months? Foreign property owners beware as swinging additional taxes are en route for your principal and secondary homes, taxes on your bank accounts and even utility bills are already planned for by the Socialist Government from January 2021.

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ECONOMY

Spain’s middle-class youngsters the most likely to end up poor across all EU

Spain leads the ranking of EU countries with the highest risk of young people ending up in poverty as adults, despite coming from families without economic difficulties.

Spain is the fourth EU country with the highest inherited poverty
Spain is EU country with most middle-class young people who end up poor. Photo: Jaime ALEKOS / AFP

Spain is also the fourth EU country with the highest rate of inherited poverty risk, according to Eurostat, the EU Statistical Office.

Data on intergenerational poverty indicates that there is a correlation between the financial situation of the household you grew up in and the risk of being poor when you reach adulthood and in Spain, there is a strong link. 

The latest statistics available from 2019 show that the at-risk-of-poverty rate for the EU was 23 percent among adults aged 25 to 59 who grew up in a poor financial situation at home when they were 14 years old. This is 9.6 percentage points more than those who come from families without financial problems (13.4 percent). 

READ ALSO: Spain’s inflation soars to 29-year high

How the situation in Spain compares with the EU

Spain has become the EU country with the highest risk of poverty among adults who grew up in families with a good financial situation  – 16.6 percent.

This was followed by Latvia with 16 percent and Italy with 15.9 percent.

That statistics also show the countries where it is less likely to be poor after growing up in households without economic difficulties. These include the Czech Republic (5.9 percent), Slovakia (7.9 percent) and Finland (8.5 percent).

The overall poverty rate in the EU decreased by 0.1 percentage points between 2011 (13.5 percent) and 2019 (13.4 percent), but the largest increases were seen in Denmark (1.9 points more), Portugal (1.8 points), the Netherlands (1.7 points) and Spain (1.2 points).  

On the other hand, the biggest decreases in the poverty rate were seen in Croatia (-4 percent), Lithuania (-3.6 percent), Slovakia (-3.5 percent) and Ireland (-3.2 percent).

READ ALSO: Spain’s government feels heat as economic recovery lags

Inherited poverty

The stats revealed that Spain was also the fourth country with the highest rate of inherited poverty risk (30 percent), only behind Bulgaria (40.1 percent), Romania (32.7 percent) and Italy (30.7 percent).

This means that children of poor parents in Spain are also likely to be poor in adulthood. 

The countries with the lowest rate of inherited poverty risk were the Czech Republic (10.2 percent), Denmark (10.3 percent) and Finland (10.5 percent).

The average risk-of-poverty rate for the EU increased by 2.5 percentage points between 2011 (20.5 percent) and 2019 (23 percent), with the largest increases seen in Bulgaria (6 points more), Slovakia and Romania (4.3 points), Italy (4.2 points) and Spain (4.1 points).

The biggest drops were seen in Latvia (-8.5 points), Estonia (-8.0 points) and Croatia (-2.3 points). 

The largest gaps in people at risk of poverty when they reach adulthood were in Bulgaria (27.6 percentage points more among those who belong to families with a poor economic situation as teenagers compared to those who grew up in wealthy households), Romania (17.1), Italy (14.8), Greece (13.5) and Spain (13.4).

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