Long Term Short Time In Spain

Arcelor in deal to lay off thousands in Spain
By Peter Marsh in London

Published: June 3 2009 19:09 | Last updated: June 3 2009 19:09

ArcelorMittal has struck a deal that would allow it to lay off up to 40 per cent of its 12,000 workers in Spain until at least the end of the year in the starkest sign yet that the world’s biggest steelmaker is preparing for a prolonged slowdown.

Global demand for steel this year is expected to fall by at least 15 per cent, making the year-on-year drop the worst for 60 years. ArcelorMittal – which accounts for nearly 10 per cent of world production – has been among the worst hit groups, cutting output at most of its plants by up to half.

The company said Wednesday it had agreed with the Spanish government the outline of a deal under which a large proportion of its employees in the country would be sent home for limited periods, with part of their wages while not working being paid for by the Spanish taxpayer.

The number of lay-off hours would be limited to 40 per cent of the total number of hours that ArcelorMittal’s employees in Spain would be expected to work during normal periods.

The move comes the day after BBVA, Spain’s second-biggest bank, offered its 30,000 Spanish staff the chance not to come to work for up to five years – in exchange for nearly a third of their usual salary and a guaranteed job when they return.

While ArcelorMittal said Wednesday that if an upturn takes place in the coming months it will not need to take advantage of the lay-off facility, the move fits in with growing indications in the steel industry that there is little imminent prospect of the sector returning to health.

Charles Bradford, a partner at Affiliated Research Group, a US consultancy, said: “If I were Lakshmi Mittal [ArcelorMittal’s chairman and main shareholder] I’d be preparing for the possibility that the upturn he’d like to see later in the year won’t happen.”

ArcelorMittal said it was sticking to its line earlier in the year that it expected a “technical recovery” in steel demand later in the year. It said the agreement with the Spanish government covering working hours and lay-offs was needed to ensure that Madrid paid for a proportion of employees’ wages while they were at home, with workers also continuing to be paid by the company.

Under the scheme – similar to those in place in other continental European nations but not in Britain – ArcelorMittal’s Spanish employees affected by the programme could receive 90 per cent of their normal pay, even while not at work.


A very unusual and novel cost cutting measure from BBVA, the Spanish bank. The 70% cost reduction, with a guaranteed pool of employees after the period is up is certainly a new approach.

Employees of BBVA, Spain's second biggest bank, are being offered 30 per cent of their usual salary in return for staying away from work for between three and five years.

Anyone signing up to the scheme is guaranteed a job when their extended leave comes to an end. They will also have their health care costs covered for the length of their sabbatical.

The offer is targeted at long-term employees of the company who have "personal or professional projects" they wish to undertake during their time off.

Juan Ignacio Apoita, BBVA's head of human resources, told the Financial Times: "We're looking at offering alternatives to people. It's obvious as well that it has an impact on costs."

Other options open to the bank's 30,000 Spanish employees include a shorter working week on reduced pay, or time off arrangements to allow staff to look after relatives or go back in to education.

Although Spanish banks have escaped the worst of the global downturn because of tight regulation, they have found it difficult to impose redundancies because staff are entitled to large payoffs under domestic labour laws.

In Britain, manufacturing workers at firms including Jaguar Land Rover have agreed to accept four-day-weeks and temporary factory shutdowns in an attempt to minimise job cuts and keep their employers afloat.