- On 19 January, the Government and social partners agreed to extend the ERTE furlough schemes to 31 May 2021, with the same system of exemptions.
- The extension gave stability, but each month of furlough was also a month without deciding the real size of the company after the crisis.
- The time gained is only worth it if used to plan scenarios, watch cash flow and talk to staff.
On 19 January 2021, the Government and the social partners agreed to extend the ERTE furlough schemes until 31 May, with the same system of exemptions for the hardest-hit sectors. It was the fourth extension, agreed with employers and unions, and it kept in place the main tool used to protect employment during the health crisis. For companies in the hardest-hit sectors, it was the difference between being able to keep their teams and having to rethink their size immediately.
For thousands of companies and workers, the news meant continuity and relief. But it also raised a basic question: how much longer a provisional situation could be sustained and what decisions were being postponed in the meantime. An extension buys room, but on its own it does not settle the future of each business. That is why, more than the date of the extension, what mattered was what was done with that time.
What an ERTE is
A temporary employment regulation procedure allows companies to suspend contracts or reduce working hours for economic reasons or force majeure, without dismissing staff. Workers keep their link with the company and, during the suspension, receive an unemployment benefit, which protects their income while activity recovers.
In this crisis, moreover, companies in the hardest-hit sectors enjoyed exemptions from social security contributions. It was a tool designed to buy time, not to replace the underlying decision about the size and structure of the company once the crisis had passed. In other words, it helps to get through a rough patch, but it does not guarantee that activity will return to its previous level or with the same staffing.
Stability in exchange for uncertainty
The extension gave stability, but each month of furlough was also a month without deciding the real size of the company after the crisis. Planning for that day after was the employer’s job, not the rule’s. Keeping jobs without a clear income forecast demands especially close attention to cash flow, because the costs that are not suspended keep running. Rent, utilities, financing instalments and taxes are not suspended along with the contract, and it is worth knowing exactly how much they cost each month.
For families, the extension meant more months of reduced but secure income, with the expectation of returning to a full job. It also meant uncertainty: not all sectors recovered at the same pace, and planning expenses, mortgages or medium-term projects on a partial income calls for caution. Talking at home about which expenses are fixed and which can wait helps to avoid overcommitting.
What to do with the time gained
This is the moment to build realistic demand scenarios: what happens if activity returns soon, if it returns at half the level or if it takes longer than expected. With them, it is worth reviewing the cost structure and deciding what is essential, what can be renegotiated and what financial room exists. Talking to labour advisers about the terms of the return to work avoids surprises later. If the return to work is going to be gradual, it is worth setting clear criteria on which posts and shifts come back first.
It is also worth confirming which requirements and obligations come with staying within the aid scheme, and documenting the decisions taken. An extension is an opportunity to put things in order, not just to wait. The sooner the difficult decisions are taken, the more room remains to carry them out in an orderly way.
Gaining time only helps if it is used to decide better.
This article is general information. It is not legal, tax or investment advice, and it does not take anyone’s particular circumstances into account.
