January 16, 2021

Feijóo’s new restrictions facilitate access to ERTE for urban entrepreneurs and make it difficult for rural ones


The new plan against the coronavirus promoted by the Xunta brings with it a novelty of important economic effects. Feijóo’s decision places 250 city councils in the medium-high level of restrictions. Many of them were at much more lax levels and now they will have to submit to new hourly limits for hotels and businesses, a curfew that is being advanced and a general call to citizens not to leave their homes. All this without the Xunta having imposed the perimeter closure of their territories.

Galicia asks to limit the meetings to four people, advances the curfew at 22.00 and puts all its municipalities on alert

Galicia asks to limit the meetings to four people, advances the curfew at 22.00 and puts all its municipalities on alert

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To date, the Galician Executive considered that the passage to the medium-high level of restrictions was necessarily accompanied by limits to mobility. If it meets its general criteria and after the decision adopted this Tuesday, the Galician Government should have closed all the municipalities of Galicia. It has not done so and that is a detriment to the economy of rural areas, compared to that of urban areas. The businessmen of the closed municipalities will be able to opt for the quick ERTE and benefit from business bonuses alleging cause of “force majeure”. Without perimeter closure, the rest will see how the aid moves away. In strictly economic criteria, the decision benefits the urban environment and large companies, to the detriment of the hotel industry, SMEs and small businesses in towns and villages.

64.3% of the Galician population, resident in 63 municipalities -including the seven cities-, will have restricted mobility and will only be able to leave their municipality for activities considered essential, such as work or care for dependent people. Businesses in these municipalities will then be able to request and obtain an ERTE for their workers since the perimeter closure is sufficient reason to accept the suspension of a contract or the reduction of working hours due to “force majeure”. This type of ERTE, unlike the one that invokes economic reasons, carries bonuses since it is the State, and not the employer, who will pay the bulk of the Social Security contributions of the affected employees.

A business, a hotelier or a large company in the metropolitan belt of one of the Galician cities will thus, from this Friday, have much more facilities to reduce their labor costs during the pandemic. They will be able to temporarily send their employees to unemployment or reduce their working hours and save a large part of the fees. But, on the contrary, a rural tourism house located in one of the 250 Galician municipalities that pass a medium-high level of incidence of COVID, with restrictions on capacity and social activities, but without perimeter closure, will not be able to benefit from that figure of an ERTE due to force majeure.

“A business or hotel is greatly affected by the perimeter closure because it is clear that its customers are diminished if they cannot come from another municipality than their own,” corroborates the general secretary of UGT A Coruña, Ángel Iglesias. And that in the medium term will have consequences: “it will hinder the recovery of the economy in rural areas.” ERTEs due to force majeure are designed to promote economic recovery after the pandemic. “When a businessman does an ERTE, he does it out of necessity, to reduce costs and avoid closing his business,” Iglesias explains. The danger as the pandemic continues is that many small businessmen “do not leave the ERTE and end up closing it by running out of sufficient financial capacity to meet expenses.” By being left without a perimeter closure, and therefore without reason to invoke “force majeure” to make an ERTE, rural entrepreneurs are disadvantaged to recover in the future. “The big problem is the crisis of internal consumption of enormous caliber that all this generates. It is not an economic or financial crisis”, emphasizes the union leader, “this is a chain: if you close a business, the suppliers close, the consumption and employment “. And the economic reactivation will become much more difficult.

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