Halt in ERTE departures initiates at the onset of summer
Holdin' On: A Dwindling Workforce, Zombie Companies, and a Confounding Recovery in Spain's Hospitality Sector
Let's kick things off with a hot topic: Julio started with a staggering 447,820 workers on furlough (ERTE). That's a far cry from the number shielded by this measure at its peak (April 24, 2020, with a whopping 3,617,205 furloughs). The drop? A mighty 87.6%. Yet, here's the thing—things ain't what they used to be. Vaccinations are on the rise, the activity is picking up, and there are fewer restrictions than a few months ago. Still, there's a significant pool of workers who can't get back to their jobs full-time.
It's worth noting that the pace of worker recovery is slowing down in June. A 15% decrease in furloughs from May 1 to 31, compared to a mere 4.4% drop between June 1 and 30, says it all.
The Twisted Tale of the Hospitality Sector: Job Creator, but Keeps Many on Furlough
Here's the catch: The hospitality sector added 126,520 jobs in June alone. That's a hefty 11.6% increase in employment in that sector compared to May. Summer's here, and there are new faces joining the sector with a brighter outlook than a few months ago.
However, it's a strange dance: this bustling activity keeps the most workers on furlough: 192,963, as of the end of June, which doesn't quite add up. The reason lies in the patchy recovery of the sector: some activities need more hands, while others are stuck as they face restrictions in international tourism.
For example, in the group of Travel Agencies and Tour Operators, a mind-boggling 48% of employees are still on furlough. The number is 34.6% in Air Transport, and 25.8% in Accommodation Services. By territories, the percentage of employees on furlough, out of the total affiliated to the General Regime, is higher in provinces with a greater weight of the service sector, like Las Palmas (12.3%), Santa Cruz (9.9%), and the Balearic Islands (5.1%).
Dead Men (and Women) Walking: The Zombie Companies
According to Social Security data, over 300,000 people remained on furlough in June under one of the modalities that involved exemptions for their companies, representing nearly 70% of the total. But here's the real kicker: almost 150,000 workers remained with their contracts suspended, unable to return to their companies. These companies prefer to keep paying costs because, if they dismissed the workers, they would have to hand back the aid they received. These companies, barely keeping their heads above water in normal circumstances, are nicknamed "zombie companies". Approximately 40,000 companies in Spain are hanging on by a thread in this grim situation, mostly found in the construction, commerce, communication, and industry sectors.
Díaz Stands by the Furlough Protection Mechanism
The third vice-president, Yolanda Díaz, believes that companies with troubles aren't the norm. The Minister of Labor points out on Radio Nacional's Morning Show that these companies are primarily "linked to the tourism value chain." She's sure they'll make it back on their feet because Spain is a "world power" in this sector. The vice-president considers the furlough protection mechanism to be "effective" and stresses that many of the 3.6 million workers who were covered at the peak of the pandemic have "rejoined their companies with all their rights."
That's the skinny on the strange recovery of Spain's hospitality sector. It's a wild ride for the workers and the companies, but things are movein' and shakin', so hang on tight!
- Despite the increasing activity and fewer restrictions in the hospitality sector, an unexpected contradiction arises as the sector continues to keep the most workers on furlough, with 192,963 workers in June alone.
- The furlough protection mechanism, which was effectively utilized by over 3.6 million workers at the peak of the pandemic, is still considered crucial by the third vice-president, Yolanda Díaz, as many companies in the struggling tourism sector remain financially reliant on this system.
