Spain could extend furlough scheme to 2021

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Spain is likely to extend its furlough scheme until the end of the year, and possibly into 2021 for the worst-hit industries, as it grapples with an economic meltdown the country's labour minister has said.

A final decision will be made in September on extending support based on economic data over the summer, said Yolanda Díaz, a member of the radical leftist party Podemos.

In an interview with the Financial Times, Ms Díaz said: "The government is going to be there for the sectors that most need it – without any room for doubt.

"It would not make sense to undertake this gigantic, unprecedented effort in the Spanish economy [to preserve jobs] and then just let things fall away."

She cited the tourism, aviation, maritime, leisure and cultural industries as those facing the most difficulty because they are unlikely to resume business as normal this year due to social distancing rules and a plunge in global air travel.

It comes less two weeks after the Spanish government announced plans to extend its taxpayer-funded emergency jobs support scheme until the end of September in an attempt to mitigate the impact of the coronavirus lockdown.

Under the country's scheme, the programme pays about 70pc of the salaries of temporarily laid off workers.

Maintaining the scheme from March through September is expected to cost between €10bn (£9.1bn) and €11bn.

It currently covers some two million workers, down from a peak of about 3.4 million at the height of the country's strict lockdown.

Last month the French labour minister said its own "temporary unemployment" scheme to avert mass lay-offs and bankruptcies could last up to two years.

The UK's furlough programme pays workers up to 80pc of their salary. It is set to expire at the end of October and will be gradually tapered back from next month, with employers asked to increase the amount they contribute.