Social spending in Spain is highly biased towards high incomes due to the high weight of contributory benefits. Although recent measures such as the minimum vital income (MIV) seek to break this historical trend, Social Policy analyst at the OECD, Horacio Levy, believes that there is still some way to go.
The analyst, who works in Paris, has analyzed the latest available data in a report from the Fundació La Caixa without taking into account the covid period. These are data from 2018 and 2019 and show that Spain was at the bottom of the ranking of European countries with public social spending equivalent to 23% of GDP. Levy explains that in the years of the pandemic there was strong growth thanks to the emergence of ERTE (temporary employment regulation files), whose weight grew to 30% in 2020 and 28.1% in 2021. “The Covid years were exceptional and on the other hand, the 2018 and 2019 years of the study show the normal scenario,” explains Levy. In those years it is seen that “contributory economic benefits (for example, pensions and unemployment benefits) constitute 64% of total social spending in Spain, while in the EU this proportion is 52%,” says the report.
Levy reflects that “the contributory system has its logic but the problem is what happens to the people who cannot contribute.” In Spain, if a worker has a high salary, when he retires he will have a high pension. This causes the part of the pie that these high incomes take from the global amount of social spending to be higher.
Regarding the impact that the IMV launched by the Government of Pedro Sánchez may have on future statistics, the OECD analyst recalls that it is a mechanism that has not yet been fully deployed and has not reached all potential beneficiaries. . In any case, the work argues that "it would be necessary to undertake structural reforms to achieve a real reduction in inequality, since small increases in tax and benefit policies would only have a limited effect on income redistribution."
The model is very clear regarding the distribution of resources. The report specifies that the policies in Spain “have been designed with workers with standard and stable work histories in mind, it is possible that contributory benefits do not adequately protect vulnerable groups, such as unemployed people and workers who do not have a standard work.
Levy adds that benefits do not always have to be monetary and lists a series of social policies that could benefit vulnerable groups such as women, young people and children. In this chapter she highlights the promotion of vocational training (VET) programs for young people or the facilitation of access to daycare for families.
Before the pandemic, social spending in Spain in relation to disposable income was lower than the EU average ratios for children (by 38%), young people (by 45%) and women ( by 16%), according to the report.
Regarding the measures taken during the pandemic crisis, it is highlighted that “the policies applied to mitigate the economic consequences have been effective in fighting inequality in the short term. But it is possible that the regressive effects of the crisis on the labor market will persist in the long term if appropriate measures are not subsequently adopted.”
