The persistent drought in Spain has serious consequences for the business operations of various companies. The Catalan cava producer Freixenet is also taking drastic measures. The company has announced the introduction of a temporary employment regulation (ERTE) for 615 employees, which will come into effect from May.
This step is being taken to stabilise business operations and guarantee employment in the longer term.
What is an ERTE?
An ERTE, or expediente de regulación temporal de empleo, is a measure that allows Spanish companies to temporarily suspend contracts or reduce working hours in the event of economic, technical, organiational or production problems. Freixenet has previously followed this route during the height of the COVID-19 crisis and is now forced to reactivate it due to the drought.
Extensive effects of the drought
The decision to implement the ERTE affects most of the employees of Freixenet and Segura Viudas. Only employees engaged in commercial activities are excluded. Employees in production, administration, marketing and finance will experience the effects of this measure the most. This affects 615 of the company’s 778 employees. Retired employees who have partially resigned are not affected by this measure.
Company council already informed
The request for the ERTE is currently before the Generalitat for approval. The management has already informed the works council about the plans. This measure illustrates the seriousness of the situation in Catalonia, a region particularly hard hit by the drought. The government of Catalonia has already declared a state of emergency due to the water shortage and imposed restrictions to reduce water consumption.
Record turnover
Despite the financial challenges posed by the drought, Freixenet reported a record turnover of €1.23 billion over the past year. That is an increase of 4.1% compared to the previous year. These figures are dire: while the demand for cava is increasing worldwide, Freixenet’s ability to meet this demand is threatened by external factors such as the ongoing drought.
