June 25, 2020 / 1:54 PM / 9 days ago

Spain to extend furlough schemes by three months until September 30

MADRID (Reuters) - Spain is set to extend until Sept. 30 national furlough schemes aimed at mitigating the effect of the coronavirus lockdown under a government agreement with labour unions and the main employers’ association, the labour ministry said on Thursday.

Hard-hit sectors like hospitality will receive the most support, though other industries not yet able to return to normal activity will also be included.

Originally due to expire on June 30, the current system of public aid, known as known as ERTEs, had been linked to Spain’s state of emergency, which ended on June 21.

“Measures to protect workers and businesses will be adapted to the current context in order to continue supporting the most affected sectors,” the ministry said.

The extension will be approved at a cabinet meeting on Friday.

More than 3.4 million workers were supported by ERTEs at the height of the strict lockdown, though that number has fallen rapidly as the country began easing restrictions.

Maintaining the programme, along with the payment of unemployment benefits, cost around 5.12 billion euros ($5.74 billion) in May.

Social Security Minister Jose Luis Escriva said the furlough schemes would cost the state-run system between 10 billion and 11 billion euros over the period from March through September.

Spain’s economy is reeling from the pandemic, and the country has recorded more than 28,000 confirmed deaths and nearly 250,000 cases of the virus.

The International Monetary Fund on Wednesday forecast a 12.8% economic slump in 2020 but the government stuck to its prediction for a milder 9.2% contraction.

Reporting by Belén Carreño, Nathan Allen and Inti Landauro; Editing by Andrei Khalip and Frances Kerry

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