Madrid/Palma.—The government said this week that it will approve this week an extension in special benefits for the poorest job seekers and boost payments to those with families to look after.

The special monthly payment - a lifeline for many in a nation with one in four workers jobless - kicks in only when regular unemployment benefits run out.

Introduced by the last Socialist government, it had been due to expire on August 15. But at the last moment conservative Prime Minister Mariano Rajoy announced it would be extended. A cabinet meeting today will approve the extension, and also increase payments to those recipients who have families to support, the Labour Ministry said in a statement. The special benefit amounts to 400 euros for individual recipients, but is to be raised to 450 euros for people with a spouse or partner and at least two dependant children, it said. Regular unemployment benefits last a maximum of two years in Spain depending on how long a worker has made social security contributions. Today, ministers are also expected to decide on the structure of a “bad bank” to hold bad loans weighing on Spanish banks since the collapse of a property bubble in 2008, an Economy Ministry spokeswoman said.

Spain's eurozone partners have agreed to provide a rescue loan of up to 100 billion euros to salvage the banks, but under strict conditions including the creation of a bad bank.

The cabinet will also adopt new rules on the sale of preference shares, sophisticated investments that were sold to hundreds of thousands of ordinary customers by their banks, the spokeswoman said. Finally, the ministers will strengthen the powers of the state-backed Fund for Orderly Bank Restructuring (FROB) enabling it to manage the banking shakeup together with the Bank of Spain, she said.

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