Editor’s note: This article was first published in April 2012 as news shortly after Spain’s 2012 labor reform; the first-quarter ERE figures, the 5,273,600 unemployed at the end of 2011 and the forecasts for 2012 are from that time.
One of the “virtues” of the new labor reform is how easy it makes it for companies to file EREs (expedientes de regulación de empleo, Spain’s formal procedure for collective layoffs, temporary contract suspensions or cuts in working hours). It has reached even the popular children’s series Pocoyo, whose production company has filed an ERE affecting 30% of its staff.
That figure is perhaps insignificant, because Catalonia reports that its EREs are up 60%, and the Basque Country 55%. Translated into numbers of unemployed people, that reaches levels that are far too high.
Which sectors are affected
Industry saw 737 EREs filed in the first quarter of the year, an increase of 166%, accounting for 4 out of every 10 EREs filed. Agriculture is the sector with the fewest problems of this kind.
The services sector, one of the usual sources of EREs, reached 292 in Catalonia alone, and construction companies (still using the Catalan figures as an example of the national trend) reached 252. In total, they affect just over 21,000 people.
The “sad” figures
According to Ministry of Labor data, the EREs carried out in 2012 amounted to 45% of those filed the previous year. It’s no small matter: they affect just over 27,000 people, of whom 20.1% saw their employment terminated, 58.8% had their contracts temporarily suspended and the rest had their working hours reduced.
The number of procedures rose by 33%: 20% were terminations, 50% suspensions and the rest reductions in working hours.
Only 5% of EREs were agreed with workers’ representatives, whereas in Catalonia agreement between the two sides reached 94% of the total.
As an example of the situation, of the EREs filed in Catalonia:
- 85% were temporary or involved reduced working hours, and
- 15% were dismissals.
Unemployed people without benefits
The official number of unemployed people at the end of 2011 was 5,273,600, and 40% of them receive no financial support at all. The figure comes to two and a half million.
The remaining 60% receive one of the benefits or allowances, a share known as the coverage rate.
But that’s not the scariest part. The problems continue, and by the end of 2012 hundreds of thousands of contributory and non-contributory benefits will run out: some 200,000 benefits granted in 2010, since these payments last up to 24 months, or two years. On top of that, in 2012 the number of unemployed would grow by 630,000, while spending on unemployment benefits falls by 5.5%. Some estimates suggest that 650,000 unemployed people could stop receiving benefits, which would bring the number of unemployed people receiving no benefit or allowance at all to 2.5 million.
Sad, very sad.
Featured image: Ignacio Renuncio, Public domain, via Wikimedia Commons.
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