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ERTE saved more jobs than expected, paid for the State and other “successes” revealed by the OECD

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That ERTEs constituted a network that contained hundreds of thousands of jobs during the pandemic is something that no one disputes. Finally, despite the bad omens, time has also shown that these were not massive EREs (collective layoffs). This Wednesday, the OECD presented a study that analyzes the tool to deal with the COVID crisis and classifies it as a “great success”, with data on its effectiveness that goes beyond what was expected, both in the protection of jobs and in the economic bill. for the country. The balance is even positive for state coffers, indicates the OECD.

The report Preparing ERTE for the future: assessing support for job retention in Spain during the COVID-19 pandemicpresented this morning in Madrid by economist Alexander Hijzen, underlines that the tool has proven to be “very effective in preserving employment”.

Not only for the more than four million workers covered by ERTE at one point during the pandemic crisis, but its effect has been multiplier. The effect of ERTE on overall employment was even more important than the protection of workers covered by the tool, indicates the international organization.

Up to two jobs were registered for each in ERTE

ERTE avoided mass layoffs due to the cessation of activity and restrictions due to the pandemic, a common reaction in the Spanish labor market to crises. This has prevented many of these people from becoming unemployed, but the OECD also highlights other positive effects, such as “its role in preventing congestion effects” in labor markets.

These congestion effects “occur when many job seekers compete for a limited number of vacancies during an economic downturn.” It must be taken into account that Spain already has a high level of unemployment, at the time more than three million people, which would have started to compete with hundreds of thousands of additional unemployed due to COVID. This situation ultimately results “in an increase in the expected duration of unemployment”, explains the OECD.

The study shows that the effects of congestion increased the effect of ERTE on employment “by 50% or more”. As a result, “the effect of ERTE on overall employment exceeds the absorption level”. OECD calculations indicate that for each worker covered by ERTE, “between 1.1 and 2.2 jobs were saved”.

According to the study, in the absence of aid to maintain employment, the unemployment rate would have been “at least four percentage points higher” than its real rate on average over the 18 months since March 2020 .

An investment that avoided a higher cost of unemployment

One of the consequences of this important protective effect on employment, not only for people covered by ERTE but also of the “congestion effect” on the labor market, has been a significant saving on social security benefits. unemployment in Spain, notes the OECD.

Here again, the conclusion of the international organization may be surprising. ERTEs were a very expensive tool, worth around 35 billion euros, which represented an effort for state coffers to protect employment and the productive fabric of companies in times of crisis.

There are those who question whether this was a necessary effort or not, whether this disbursement of public money was justified for the protection of this group during the period shock because of the pandemic, but the OECD now reveals that this money was an investment that paid off for Spain. The bill was positive for the state coffers, he said.

The study concludes that “the budgetary balance of support for job retention was positive”. “In other words, the cost of employment support was more than offset by lower spending on unemployment benefits and higher tax revenues. »

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