Thursday, December 2

ERTE applications fall due to inspections against ‘zombie companies’

Alcoa workers protests.

The last extension of the ERTE, agreed at the end of September by unions, employers and the Government, has two objectives: the first, the usual, is to continue protecting companies that still need this mechanism of suspension of employment in the face of economic difficulties caused for the pandemic. The second, which is novel, is to bring out all the businesses that are still in ERTE by inertia, but that no longer have real possibilities of resuming activity: the so-called “zombie companies”. And judging from the preliminary data collected by THE PERIODIC OF SPAIN, newspaper that belongs to this group, Prensa Ibérica, those “zombie companies” could be very numerous: with the deadline for requesting the renewal of the ERTEs already closed, the Autonomous Communities consulted by this newspaper report figures that are in half the number of ERTE that were in force until now. At the end of September there were 80,571 active ERTEs, so this advance data anticipates a reduction of several tens of thousands, to be confirmed in the coming weeks.

Crossing the data from the end of September of Social Security with renewals requested in eight regional employment services Until October 15 (date of the end of the term) this notable collapse can be seen: in Andalusia, where there were 11,933 ERTE as of September 30, the request for renewals has totaled 5,104, 42.8%; In Catalonia, compared to 14,916 ERTE in September, there were 8,225 requests in October (55.1%), and in Madrid they went from 11,925 last month to 5,345 requests (44.8%). Similar percentages are obtained in the Balearic Islands (55.7%), Castilla-La Mancha (46.2%), Galicia (57.9%), Asturias (48.8%) and somewhat higher but also with a significant drop in Aragon (63.6%). They are representative territories (among all, they concentrate 2 out of every 3 workers in ERTE) and with a very diverse productive structure, factors that indicate that the decline in ERTE requests is generalized. Adding the data, while there were 53,295 ERTE in force in those autonomies as of September 30, in October only 26,664 renewals had been requested: 50%.

The fall is not due only to “zombie companies”, they point out from the regional employment services: improvement of the economic situation and the lifting of restrictions also play a role significant in reducing the number of ERTE. But these two positive trends have also occurred in recent months, and so far there has not been a decline in the number of ERTEs of the magnitude now anticipated. Since June, when there were 106,679 ERTE in operation, and until September, the reduction in the number of ERTE has been less than 10,000 per month; Advance figures point to a 40,000 drop in October.

More controls

The reason for the strong setback is in a change in the regulation in force so far. The ERTEs were launched at the end of March 2020 to try to avoid massive layoffs with the first confinement, and have been extended, with modifications to accommodate the situation of the pandemic and the economy, up to five previous occasions. What makes this sixth extension special, approved at the end of September and which extends the ERTE mechanism until February 28, 2022, is increased requirements and controls: requires companies to submit a new application to renew an ERTE in progress (as opposed to the automatic extension of previous extensions), it also requires the submission of new documentation accrediting the progress of the File and the relationship of the affected workers, and -very important- remits the ERTE extended to the Labor Inspectorate for your test. All, precisely, to discourage the presentation of applications by “zombie companies” – and also those that could be in a situation of fraud – that could not comply with these new requirements and would be exposed to a sanction.

The final and complete figures will be collected and published by Social Security late October or early November; It must be borne in mind that although the application period is closed from the 15th, the regional labor authorities have 10 more days to issue a resolution, and that is when the files will be sent to the Labor Inspectorate for analysis.

With the reduction of the number of ERTE, there will also be a notable decrease in workers protected by this formula Safeguarding of employment: At the end of September there were 239,230 employees with their employment totally or partially suspended for being in one of these files. With the first impact of the pandemic, ERTE reached more than 3.5 million people, and half a million companies from almost all economic activities; now, the main affected are companies and employees of certain sectors: hotels, restaurants, travel agencies, air transport and gambling.

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