Spain’s government has announced that it is investigating approximately 10,000 companies suspected of ERTE furlough fraud.
THE announcement comes just a week after the government extended the scheme for companies affected by the coronavirus for the second time until September 30. Under the system, companies suffering losses from the Covid-19 pandemic and the confinement measures can temporarily suspend workers or reduce their working hours, allowing them to apply for unemployment benefits, to reduce costs and help keep the business afloat. Thousands of businesses have filed for ERTEs since the Spanish government introduced a lockdown in mid-March.
However, around 75,000 letters have been sent to companies suspected of ERTE fraud to advise them that they are being investigated, according to Spain’s government. Over the next 15 days or so, the labour department’s officials will pay a visit to approximately 10,000 companies suspected of fraud. In an interview with Spain television programme, El Intermedio, Spain’s Minister of Labour and Social Economy Yolanda Díaz, confirmed the extent of ERTE furlough fraud going on in the country. “There are people who tell me that they are still on ERTE, and yet they go to work without being paid. That is fraud and is a huge irregularity, since it is public money, and there will be penalties for those caught,” she warned.
According to Díaz, 73 per cent of fraud allegations correspond to companies that employ unemployed workers; 5 per cent of companies have not registered their workers in the social security system; 4.5 per cent of freelancers who are receiving the benefit yet working at the same time; and 8 per cent of workers are receiving unemployment benefits while working. One of the fraud examples cited was a small confectionary firm of 10 employees, where all were working on the premises at the time of an inspector’s visit, despite the fact that six of the employees had their contract suspended and two of them had their working hours reduced by ERTE.