The Spanish government reached an agreement with the social partners on Wednesday to extend public funding for short-time working, one of its main tools, until September 30, to cushion the social shock of the pandemic.
Read also: Partial unemployment: the government is preparing the end of aid
"We managed to renew by consensus the (partial unemployment) scheme until September, achieving a good balance between protection and encouragement to resume workers"
, greeted on Twitter the Minister of Social Security, José Luis Escrivá . It has been several times since the left-wing government extended this mechanism with a heavy impact on public finances, in force since the end of April 2020 and which was due to end on May 31.
But these last negotiations were particularly difficult because the employers as the unions rejected the new criteria wanted by the government of the socialist Pedro Sanchez to grant this aid.
Madrid wanted to limit the funding of short-time working to only companies that undertake to quickly reactivate their activity and put their employees back to work.
In fact, the agreement reached on Wednesday provides for a gradual reduction in exemptions from social contributions by September for companies that keep their employees on short-time work.
640,000 people still on partial unemployment
At the end of April, around 640,000 people were still on short-time work, against 740,000 at the end of March, according to the latest official figures available. Half of them work in tourism and hotels, key sectors for the Spanish economy. The device has covered up to 3.4 million people at the height of the strict containment imposed in the spring against the Covid-19 pandemic. The unions and the government believe that it has drastically reduced job destruction, while Spain recorded 730,000 more unemployed in 2020 under the effect of the pandemic.
But this device weighs heavily on public finances: in 2020, the Spanish state spent around 40 billion euros to finance partial unemployment plans and aid to self-employed workers. In 2020, the Spanish deficit exploded under the effect of the pandemic, exceeding 123 billion euros, or 10.97% of GDP, a record since 2009. Madrid also revised its deficit forecast at the end of April. for 2021, at 8.4% of GDP, due to a poorer than expected economic outlook in the context of the Covid-19 pandemic.
