Spain’s car industry eyes extension of furlough schemes to save jobs

The pandemic has seen demand for vehicles plummet at a time when there has been a shortage of microchips or semiconductors, forcing the sector to implement ERTE schemes to avoid mass permanent lay-offs. [EFE/Toni Albir]

The Spanish car industry is mulling extending temporary lay-off schemes known as ERTEs currently due to expire at the end of the month until at least next September to mitigate the pandemic’s negative impact on the sector. EURACTIV’s partner EFE reports.

According to the Spanish car manufacturers’ association (ANFAC), the automotive sector and Spain’s economy more generally are not expected to recover before at least 2023. Highlighting the severe drop in sales in 2020, the group warned against expectations of a quick recovery.

Almost all ANFAC members, including giants such as Renault-Spain, BMW-Ibérica, Ford-Spain, Iveco-Spain, Mercedes-Benz-España, Nissan-Motor-Ibérica and Seat, have already agreed, together with the sector’s trade unions, to extend the ERTEs beyond the summer.

Spain currently ranks eighth internationally and second in the EU in terms of the number of vehicles produced, official data from 2018 to 2019 shows. Some 570,000 people work in the automobile industry in Spain.

A perfect storm

The pandemic has seen demand for vehicles plummet at a time when there has been a shortage of microchips or semiconductors, forcing the sector to implement ERTE schemes to avoid mass permanent lay-offs.

ANFAC figures released on Monday (10 May) show vehicle manufacturing down 12.5% in the first quarter of 2020, compared with the same period in 2019.

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Protecting jobs

ANFAC said that although the microchip shortage is temporary, it is lasting longer than expected and forecasts indicate that the normal pace of manufacturing will not resume until after the summer.

Spain’s Central Bank has recently recommended extending ERTEs for employees in economic sectors worst hit by the pandemic, especially tourism.

Close to 900,000 people benefited from the country’s temporary lay-off scheme in February alone. Last year, 3.6 million workers from 550,000 companies, mainly small and medium-sized businesses (SMEs), participated in the scheme.

The programme sees the Spanish state pay workers around 70% of their normal salary and prohibits companies from firing people. In case of fraud or redundancies, companies must return exemptions from contributions to the social security system and risk heavy penalties. Those benefiting from the ERTE schemes are officially considered employed and are not counted among the country’s jobless.

New challenges: green cars

Carmakers have approved several strategic plans aligned with the targets set by the government to make the Spanish automobile industry more sustainable. 

To achieve the target of “zero-emission mobility”, ANFAC bases its model on two pillars. One of the aims is to bring the current average of 13.2 years before the renewal of vehicles down to nine years, while the other is to have three million electric cars by 2030.

This strategy, together with a shift away from older vehicles will make it possible to reduce CO2 emissions by 50%, even more than the targets set out in Spain’s Integrated National Energy and Climate Plan, ANFAC has said.

[Edited by Paula Kenny, Daniel Eck and Josie Le Blond]

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