Wednesday, August 4

The Bank of Spain: “ERTE may lose their effect if the crisis continues”

The General Director of Economics and Statistics of the Bank of Spain, Óscar Arce.

The General Director of Economics and Statistics of the Bank of Spain, Óscar Arce.

The Director General of Economics and Statistics of the Bank of Spain, Óscar Arce, has warned this Thursday that although the temporary employment regulation files (ERTE) have allowed maintaining a high number of labor relations during the crisis, his “fitness” to safeguard employment may be reduced if it is prolonged and restructuring is required at the sector and / or company level.

In these circumstances, Arce considers it crucial to “avoid decapitalization” of the workers suspended by ERTE through the “intensive use” of the possibilities introduced by the decree that extended this instrument until January 31.

Specifically, he has referred to the possibility contemplated in the regulation of arrange the collection of unemployment benefit with the realization of a part-time job not affected by suspension measures and the consideration of the workers affected by ERTE as a priority group for access to employment training initiatives.

At the same time, Arce has defended a review of the employment protection mechanisms “to achieve a more equitable distribution of protection among workers” and insists on the need to favor internal corporate flexibility instruments as an alternative mechanism for adjusting the labor market. job.

During his speech at the ‘El Norte de Castilla’ Economic Forum, Arce stressed that the most recent information “seems to point to an interruption in the recovery of economic activity” due to the second wave of the pandemic.

The director of Economy and Statistics of the Bank of Spain has indicated that the crisis is having a “marked” impact on employment (Social Security affiliation without counting ERTE in May was 20% lower than that of a year before and the unemployment rate will continue at high levels in 2021 and 2022), but also on the deficit and public debt and on companies, which have seen their profits reduce “significantly”.

In addition, it has pointed out that the trend towards deleveraging of companies observed throughout the recovery has been reverted, that the number of active companies fell by 6% annually in October, and that bankruptcy proceedings remain contained for now, “possibly as a result of the moratorium approved in April.”

Solvency problems

After a first phase of the crisis in which the measures to support companies focused on their liquidity problems, Arce has stated that the focus now shifts to your solvency problems, which requires, in his opinion, “more selective support, focused on the most affected but viable companies.”

Likewise, it argues that the instruments for strengthening equity should play a relevant role and that “new tools could be studied to channel equity toward smaller companies, possibly with the participation of the private sector.”

He also sees an improvement in the functioning of judicial and extrajudicial insolvency procedures as desirable to achieve greater efficiency and agility and allow more companies to continue their activity.

With regard to public spending, Arce has urged rebuild fiscal margins and reduce public debt, through a multi-year “comprehensive” strategy, once the pandemic is overcome. Said strategy must contemplate, in his opinion, a gradual reduction of imbalances; the detailed description of the actions to be taken in each period, and the review of the composition of public spending and revenue, all accompanied by an “ambitious” agenda of structural reforms.

In relation to the impact of European funds on the GDP forecast by the Government (+2.6 points in the GDP of 2021), Arce has stated that the final economic impact will depend on several factors, including the absorption capacity of an amount so high of funds; that they are new expenses and are destined mainly to investment, and the form of financing (transfers or loans).

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