Spending on unemployment is skyrocketing, and the Social Security deficit could reach 10 billion euros in 2012. Aiming to avoid these increased costs, the government approved yesterday a plan that would let the state stop paying laid-off workers who have two years of benefits and present an ERE (Expediente Regulado de Empleo), which is a dismissal program particular to Spanish labor law. Until now, the measure has only affected companies that employ more than 500 workers and that, in order to alleviate unemployment, will be applied retroactively dating back to April 27, 2011.
The measure will also incentivize workers to stay in the labor force longer by subsidizing employee pensions with extended job possibilities.
It has yet to be enforced on partially- or soon-retired workers, which are eating up 10 billion euros per year in government funding. Ultimately, the measures are going to be passable but not sufficient if they aren't followed by a general pension freeze.
