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Spain could extend furlough scheme to year's end: minister

Spain's Labour Minister Yolanda Diaz on Saturday suggested the government would extend its coronavirus furlough scheme for an extra three months until the end of the year. 

Speaking after talks in Majorca with the regional government and union bosses, Diaz said it would make no sense to drop the ERTE furlough scheme when it is scheduled to finish at the end of September. 

"It would not make any sense to drop a protection system as important as the one designed by the government," she said of a scheme which has benefited millions of people. 

"There is no point in designing a mechanism that involves huge amounts of public resources then at the decisive moment... we drop it," she said in comments broadcast on Spain's RNE radio. 

"The key is in the last quarter of the year," Diaz said, indicating she wanted to send a "message of calm". 

"We are not going to remove anything."

Her remarks came a day after Spain formally went into recession after its GDP fell by 18.5 percent in the second quarter. 

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

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

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 an economy battered by months of lockdown. 

The pandemic also destroyed more than a million jobs in Spain between April and June, mostly in the services and tourism sector. 

Spain's unemployment rate, which jumped to 15.3 percent by the end of June, could rise as high as 19 percent by the year's end, the government has warned, while the IMF sees it rising to 20.8 percent.

Hard hit by the virus which has killed more than 28,400 people, Spain has been struggling with a spike in new infections that has sparked European travel warnings and a British quarantine move that has damaged the fledgling recovery of tourism.

Topics: Yolanda Diaz , Spain , furlough scheme , IMF
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