As per reports in media, ArcelorMittal will temporarily lay off 11,964 workers in Spain until the end of 2009 at 90% of their salaries after Spanish government has given ArcelorMittal the green light to use flexible unemployment measures at all its Spanish sites if needed.

ArcelorMittal said that it has sealed a deal with the Spanish government allowing temporary layoffs among its 12,000 Spanish workers in response to falling global demand for steel.

It added that “The agreement made on Wednesday is valid until the end of the year and may be extended until June 1, 2010, depending on market conditions.”

It added the number of lay-off hours would be limited to 40% of the total number of working hours of the entire workforce during the period.

ArcelorMittal said it has not yet sent any of its Spanish workers home but was currently evaluating its Spanish plants to see where temporary layoffs should be made.

ArcelorMittal said in a statement "This temporary lay off plan will enable the company to adapt the activity of each plant to the actual volume of orders they are receiving.”

Employees who are sent home temporarily under the plan will receive 90% of their gross salary while not working, which would be paid partly by Spain's public unemployment service and partly by ArcelorMittal.

Bart Samyn, Deputy General Secretary for the European Metalworkers' Federation, an umbrella group for metalworking trade unions around the continent said that "We are actually, at the moment, in favor of finding such solutions, because it helps create a situation where dismissals are not necessary. Of course we would prefer if our workers could stay at work, but for us this is an intermediate solution to a temporary problem.”

The company's move in Spain is part of its larger bid to combat weak demand and soft prices by curbing production temporarily. Similar deals have been struck in other countries in Europe.

(Sourced from Reuters and Bloomberg)