Spain extends furlough scheme till end of September

Spain’s government has inked a deal with unions and business leaders to extend its coronavirus furlough scheme through the end of September, a minister said on Thursday.

This agreement “is a guarantee of certainty and stability for both workers and companies,” tweeted Labour Minister Yolanda Diaz of the hard-left Podemos party, the junior partner in Spain’s leftwing coalition government.

The move extends by three months the furlough scheme which was to have finished at the end of June.

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 the economy, which was paralysed by nearly three months of lockdown.

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

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

Spain’s unemployment rate, which jumped to 14.4 percent by the end of March, could rise as high as 19 percent by the year’s end, the government has warned, while the Bank of Spain estimated the figure would be between 18.1 percent and 23.6 percent.

Talks to extend the measure were hard-fought, with business leaders seeking an extension until the year’s end while the government tried to ease the impact on the public purse which has taken a hammer blow from the economic hibernation triggered by the virus crisis.