Madrid, Spain – More than 100,000 Spanish workers face losing their jobs as the economic damage of the coronavirus pandemic worsens, unions said on Tuesday.
As the number of cases rose to 11,178 and the death toll reached 491, large companies have sent tens of thousands of workers home under temporary layoff orders.
Economists have warned that these temporary layoffs could turn into permanent unemployment if Spain’s left-wing government does not offer an ambitious rescue plan.
Pedro Sanchez, the Spanish prime minister, was on Tuesday leading a cabinet meeting held by video conference, where the government was expected to agree to financial measures to help companies.
He announced the suspension of mortgage payments for affected workers as well as a package worth 600 million euros ($658m) in financial help for the elderly and vulnerable, and 100 bilion euros ($110bn) in state-backed credit guarantees.
Spain will also block hostile foreign takeovers of companies whose value had fallen, he said.
Carmakers Seat, Volkswagen and Renault, as well as fast-food retailer Burger King, were among the large companies that have told thousands of staff they are currently out of work.
Iberia on Friday announced a temporary layoff of 90 percent of its 16,000 employees.
As Spanish airports are only operating at 50 percent capacity, other airlines have put similar measures into place. Norwegian, a large low-cost carrier, has 7,300 employees in Spain.
Under Spanish law, workers who are temporarily laid off can claim unemployment benefits.
Staff could be out of work for as long as five weeks, after the Spanish government said the state of emergency order will last longer than 15 days.
A spokesman for the General Workers’ Union said about 100,000 workers had lost their jobs so far.
“We fear this will only get worse and these people might lose their jobs for good,” the spokesman told Al Jazeera.
In a goodwill gesture to out-of-work staff, Seat has agreed to pay an extra 80 percent on top of their usual salaries.
Burger King, which has 14,000 staff, closed all its restaurants in Spain and announced it would not carry out home deliveries as that would contravene advice from health authorities.
Some 22,000 employees from Alsea, the restaurant and cafe brand owner, have been told they will not be working “until normality is re-established”.
It is the biggest layoff from a single company so far.
Alsea defended the measure, saying in a statement it was the best way of “guaranteeing the stability of the company”.
In the tourism sector, which accounts for 12 percent of gross domestic product (GDP) and 13 percent of employment in Spain, the hotel chain Iberostar announced it had closed all its hotels in the country.
The company, which has 34,000 employees across 19 countries, said the mass layoff was a measure which “could be extended to other countries”.
Small businesses are also cutting staff, while the self-employed have found they can no longer pay off debts.
Sara Otero is the director of a hi-tech laser manufacturing company in Barcelona which has 10 staff. “We have just had to let one member of staff go, which is a shame as we had plans to grow,” she told Al Jazeera.
In Valencia, in southeast Spain, at least 137 applications for layoffs were filed by companies on Monday, affecting 4,683 workers.
In Catalonia, an important industrial region which accounts for nearly 20 percent of GDP, 70 companies laid off 3,819 staff on Monday.
“The government must pay and allow big firms, small companies and the self-employed a holiday from taxes, and offer financial help – otherwise these layoffs will become permanent,” Robert Tornabell, a professor of finance at Esade, a business school based in Barcelona, told Al Jazeera.
The Spanish government has come under intense political pressure to act quickly to save the economy, which is expected to plunge into recession.
Gabriel Rufian, a minister of parliament for the left-wing Catalan Republic Left party which supports the government, said: “I have called on the prime minister to suspend mortgages and rents and to pay unemployment benefit and loans to those who have been laid off from companies.”
Before the pandemic, the International Monetary Fund predicted GDP growth of 1.6 percent this year.