ERTE: Spain extends furlough scheme until end of January

Spain's government on Tuesday reached an agreement with union bosses and employers to extend its coronavirus furlough scheme until the end of January, despite the impact on public finances.

ERTE: Spain extends furlough scheme until end of January
Photos: AFP

The ERTE furlough scheme was launched in April in a bid to avoid massive layoffs at firms hit by the lockdown and had been due to end on September 30th.  

 It is the second time the scheme has been extended, with some 750,000 people currently benefiting from furlough conditions, down from a peak of 3.4 million at the height of the lockdown.

“The ERTE scheme can continue being an alternative to layoffs,” tweeted Unai Sordo, secretary general of the Workers' Commissions (CCOO) union, hailing the agreement.

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

Earlier this month, Sanchez said the government had spent four billion euros ($4.7 billion) per month on the ERTE scheme. In return, companies are banned from laying off staff for six months after the scheme ends.

“The ban on layoffs remains in place,” Labour Minister Yolanda Diaz told a press conference, saying the new deal was “key to finding a way out of the crisis”.

“It is a day of hope for the companies and the workers in our country.”   

Talks with employers went down to the wire over differences about the criteria for choosing firms eligible for the scheme, with some fearing they would be excluded, notably in the hotel sector.

Spain's main business lobby group, the CEOE, said the deal reached would “guarantee the survival of the largest possible number of companies and jobs at such a prolonged and difficult economic juncture”.

The government has also extended its financial support to the self-employed.

The cost of emergency measures to bolster the economy such as the furlough scheme, state-backed credits and help for the self-employed, is equivalent to 20 percent of GDP, the government has said. 

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

Spain's unemployment rate jumped to 15.3 percent by the end of June, and 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.   

The country is currently battling a second wave of coronavirus that has so far claimed more than 31,000 lives and infected nearly 750,000 in the highest infection rate in the European Union.


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UPDATE: How to get Spain’s €200 cost-of-living subsidy

At the end of last year, the Spanish government announced a new €200 handout as part of a package of measures to help alleviate the rising cost of living. The time to apply is coming up in the next few weeks, so find out who is eligible and how to get it.

UPDATE: How to get Spain’s €200 cost-of-living subsidy

At the end of December 2022, the Spanish government announced a new raft of measures worth €10 billion to help families against the rising costs of inflation.

One of these measures is a benefit of €200 for vulnerable families who are struggling with the cost of living and rising household bills.

READ ALSO: Spain axes VAT on basic foods to ease inflation pain 

Who can benefit from this help?

The €200 cheque is specifically for those families or households that earn under €27,000 per year.

Keep in mind, it’s not available to those where two or more members of the household earn under €27,000 each, but only when the income of the whole family adds up to less than this amount.

The government has confirmed, however, that it is available to those who live alone, provided they earn under €27,000 and meet all the other requirements.   

The average household income in Spain is currently €35,000, so this new aid will benefit the most vulnerable families in the country.

Are there any other prerequisites?

Yes, as well as earning under €27,000 it will not be handed out to those whose family heritage or savings exceed €75,000.

This means that the authorities will take into consideration how much savings you have in your bank account, as well as bonds, shares and stocks. They will also include physical assets such as vehicles or valuable pieces of art, but not the value of your house.

When can I apply for the aid?

You are only able to apply for the €200 grant during a specific period from February 15th until March 31st, 2023. You must make sure to do it during this window, otherwise, you could lose out. 

How do I apply?

In order to apply you will need to first apply for a digital certificate or [email protected]. You can then apply for it online through the Agencia Tributaria website page here. You will need to type in your NIE and identify yourself with the digital certificate or [email protected] 

This will then take you to the form to apply for the grant. It will ask for all your personal details such as your name, address, and employment situation. You will also have to fill out your bank details so that the handout can be sent directly to your account. It will be issued as a single payment. 

Is the aid compatible with other benefits?

The €200 cheque cannot be claimed by those who are already benefitting from the Minimum Vital Income (Ingreso Mínimo Vital) or those who receive a pension.

For those on Minimum Vital Income, this too has been extended into 2023 and has increased by 15 percent, together with non-contributory pensions.

How many people will benefit? 

The government has confirmed that a total of 4.3 million families will be able to access this handout, while the Ministry of Finance estimated that more than 8 million people in total will benefit from it.