The Bank of Spain warns that ERTEs lose effectiveness if they are extended
Temporary employment regulation files (ERTE) lose effectiveness as an anti-crisis mechanism for the affected workers to return to their jobs as they are maintained over time. The warning is made by the Bank of Spain (BdE) in an analytical article published this Thursday, where it focuses on the most vulnerable groups of workers, such as the youngest, those who have a temporary contract or those who are employed in certain activities of the service sector.
The regulator notes how in the period between 2020 and 2021, when ERTEs were widely used to weather the worst consequences of the covid pandemic on the economy, the absolute probability, on average, that ERTE workers would return to their jobs of work was “high”, although it decreased as its duration increased. This mechanism has guaranteed the return to employment to 65% of workers when it has lasted a quarterto 41.1% when it has been maintained for half a year and 26.2% of affected employees when you have had nine months long.
Social Security confirmed at the beginning of the month, in the affiliation data for the month of October, that the number of workers in ERTE remains stable in the country at around 17,000 workers, “with a tendency to gradually decrease.” At the worst moment of the health crisis in 2020, more than three and a half million employees (almost 20% of the total employed) were incorporated into this mechanism. Young people, less qualified employees and those belonging to the hardest hit sectors, such as tourism, were the most affected.
Interpret the results with caution
The data collected by Mario Izquierdo, Sergio Puente and Iván Auciellos, authors of the report, tend to corroborate that the ERTE “have been an appropriate mechanism to protect the value of labor relations and that its effectiveness, in both absolute and relative terms, is greater for short periods“. However, the researchers warn that the dilation over time of these schemes tends to reduce their effectiveness, especially among the workers of some groups.
“In particular, the results by age, type of contract and sector of activity would be indicative of a greater loss of this relative effectiveness in those cases where the value of the employment relationship, associated with experience in the job or the requirements of specific human capital is lower”, they add. However, they explain that these results they must be interpreted with certain cautions associated with the small size of the sample panel of the Active Population Survey (EPA)and should be subject to additional analysis once administrative data with richer information on this dimension become available.
The authors point out that the academic literature that has already studied the consequences of these programs in other previous episodes -which is much broader- endorses the positive effects for maintaining employment, but, at the same time, points out some costs associated with their use. , especially when the employment adjustment needs are not temporary. In these cases, some of the affected employees may see how their companies of origin are facing the need to reduce the workforce, so that their expectation of returning to the same job decreases. In these situations, “the worker finds himself in a relatively long period of inactivity that your general skills may have depreciated and in which your incentives to search for a new job may have been reduced“, they point out.
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