Temporary lay-offs continue to rise as business feels the pinch of pandemic

The coronavirus pandemic is not only taking its toll on public health but also on business, with thousands of companies submitting plans to the Catalan and Spanish governments for temporarily laying off employees while the crisis lasts.

Some 53% of companies in Catalonia surveyed by the Barcelona Chamber of Commerce have registered temporary redundancy plans, with 5% of firms choosing not to renew the contracts of temporary staff and 8% permanently reducing their workforce.

According to the results of a survey carried out by the Chamber and presented on Thursday, a third of companies have stopped doing business, with another 18% reducing their business activity, while 14% are experiencing cash flow problems.

What's more, the Pimec business association this week estimated that the losses to small and medium-sized companies and self-employed people could amount to 46.8 billion euros if the coronavirus crisis continues for another four weeks.

One of the first signs of this general fall in business in Catalonia is the wave of temporary lay-offs, with official figures on Thursday putting the number of people affected at 407,278, more than all the unemployed people in the country in February (395,214).

Among the latest companies to submit plans to temporarily lay off workers are two hotel chains, the Barceló Hotel Group, which wants to lay off 6,500 employees, and Meliá Hotels, which is aiming to let go of 8,283 workers. 

Cava producer Freixenet to lay off sales staff

Tourism is a key sector of the Catalan economy and it has been hit hard by the crisis, but another iconic sector is cava, and on Thursday, one of the country's main cava producers, Freixenet, announced it was temporarily laying off 110 sales staff.

Yet, the health crisis knows no boundaries and is affecting businesses throughout the Catalan economy. With much of the cultural sector all but shut down, theaters like Escenari Joan Brossa and music halls like Sala Barts announced lay-offs this week.

Meanwhile, the audiovisual production company Mediapro also said this week that it intends to lay off 1,200 of its employees around Spain, while Catalonia's movie theater association predicted that over 90% of its members will resort to temporary lay-offs.

With many shops closed, the retail sector is also feeling the pinch due to the crisis, and this week, the Decathlon sports products chain said it intends to lay off 8,886 employees from its more than 160 stores around Spain.

Other companies in Catalonia that also this week announced an intention to lay off staff include the Fundació Joan Miró, Iberpotash - which runs the mines of Súria and Sallent -, perfume company Puig, budget clothes chain Primark, and jewelry firm Tous.

In the past couple of weeks, some of the biggest employers in Catalonia have announced temporary lay-offs, including automakers Seat and Nissan, while low-cost airlines Ryanair and Vueling have also announced redundancies around Spain. 

Government warns firms of abusing redundancies 

Yet, the Catalan government has warned that it will not stand for the abuse of lay-offs, although it also said it has detected few fraudulent cases, and the unions have called on Madrid to tighten the law on lay-offs so that companies do not see them as profitable. 

If the authorities authorize the temporary dismissal plan, the employee's post is reserved and they get between 502 and 1,098 euros a month in benefit, which goes up to 1,254 euros if the laid-off worker has one child, and 1,411 if they have two or more children.