The Spanish unemployment rate would have tripled the EU average without the use of ERTEs | Economy

Between March and September 2020, more than 40 million workers in the European Union (3.4 million in Spain) benefited at some point from public aid to maintain employment, at risk due to the global Covid-19 pandemic. In other words, two out of ten employees saw their employment temporarily suspended and received part of their salaries from the State. On the other hand, more than four million companies (half a million in Spain) received the same public aid.

The cost for the States and for the European Commission of this job support rose to more than 100,000 million euros, according to official figures on the impact of the pandemic on community labor markets compiled in the Living and working in Europe 2021 yearbook of Eurofound, the community body that brings together employers, trade unions and the European Commission to monitor and analyze the progress of social and labor policies in the EU. According to these figures, “the financing of this aid was eight times greater than the 12,300 million euros that the European Commission calculated was spent on these measures at the height of the financial crisis in 2009”, when there were barely 1.8 million of protected workers, indicates this organization.

Given the evidence of the success of the ERTE, had it not been for this tool, what would have been the impact on the labor market? That is the question that the Eurofound economists have asked themselves and the answer has been, to begin with, that the community unemployment rate would have been higher by almost 70% since it would have climbed from the 6.8% that was registered to end of 2020 up to 11.5%. But, in addition, “the disparities between the Member States would have widened and the unemployment rates of the community countries would have diverged instead of converging”.

In this widening of the gap in unemployment rates, Spain would have been, by far, the worst-off state. Currently, the Spanish unemployment rate is already double the EU average, but if companies had not resorted to ERTEs, Spanish unemployment would have almost tripled the European rate, since instead of the maximum reached in the pandemic of 16.26% in the third quarter of 2020, the unemployment rate would have risen to 30%, according to Eurofound estimates.

Along with Spain, Belgium and Bulgaria were the other EU countries where the use of public aid to sustain employment prevented sharp increases in their unemployment rates of between 11 and 13 percentage points between the actual unemployment rate and the rate estimated by Eurofound if I would have resorted to the ERTE. In fact, Spain was, after Cyprus, the European country that had the highest percentage of workers in ERTE (20.6% of its employed).

Despite everything, in 2020 11 million temporary jobs were destroyed in the EU (one million in Spain), which represented 85% of the job cuts in the year of the pandemic. From this community body they lament that “despite the fact that unemployment protection systems were expanded to include temporary workers, this was not enough to compensate for the vulnerability of temporary workers against permanent workers.”

This destruction of employment is not only part of the pandemic crisis situation, since in 2020 there were sectors that were able to telework almost fully and that, however, due to being immersed in internal reconversion processes, announced greater cuts in 2019 than in 2020. This is what happened, according to these figures, to the financial sector, which before the health crisis cut 18% of its employment in the EU compared to 8% in 2020. The same was experienced by retail trade, which shed 12% of jobs in 2019 and 9% (see graph).

However, and despite the success of this aid, the yearbook of this body, updated in part in April 2022, highlights that the degree of citizen satisfaction with the support measures to face the crisis “has been drastically reduced, and only 12% now feel that the support measures are fair, compared to 22% in the summer of 2020.

Denmark, Austria and Finland give more weight to social dialogue

• Evaluation. The role of the social partners in the development and implementation of these large-scale employment protection schemes has not always been as extensive as might be desired, says Eurofound’s Living and Working in Europe 2021 yearbook. Although Spain comes out well in this evaluation. This analysis indicates that only Denmark, Austria and Finland have given more weight in decision-making to social partners; while after these countries there is a group made up of Spain, Belgium, Germany, Estonia, Ireland and Malta, in which social dialogue has also been very important.