Sección Políticas Públicas

Public policies

Information on the effects of policies aimed at improving living conditions is limited. Although more studies to evaluate these policies have been produced in recent years, there are still gaps that hinder the appropriate monitoring of their effectiveness. The diversity of the aspects reviewed in this chapter also makes it difficult to define a single summary measure that can be used to evaluate the results of all of them.

In the context of European countries, efforts have been made to better define some coordinated social inclusion indicators, useful for monitoring social policy. At the beginning of the century, at the Nice European Council (December 2000) and that in Laeken (December 2001), the first foundations were laid for progressing in both the coordination of the social policies of the European Union's Member States and the definition of some basic indicators that allow progress in reducing poverty and improving living conditions to be assessed.

In the following years, the European Commission developed a common methodological framework for producing indicators with these characteristics. However, almost all of the proposed indicators are focused on poverty and deprivation values more than on the measures adopted to moderate the impact or intensity of these issues.

It seems necessary to combine both the input  indicators, such as the expenditure on specific policies, and the output indicators, in order to measure the direct effect of these spending programmes. In recent years, measures on the adequacy of monetary benefits have also been generalised as one of the possible instruments for evaluating these policies. Various international organisations, such as the World Bank and Eurostat, have proposed different indicators that relate the benefits that form the safety net with variables representing household needs.

In this last section of the report on economic and material welfare, three types of indicators are analysed:

  1. Expenditure on specific policies to combat poverty.
  2. The adequacy of benefits (in relation to the necessity threshold).
  3. The impact of monetary benefits on reducing policy.

1. Benefits that protect people with insufficient resources

Spending on means-tested benefits is the first indicator of the effort made to meet needs specifically linked to insufficient income and resources. These benefits include different types of subsidy: benefits for illness, disability, old age, subsistence, family, unemployment, housing and social exclusion.

Firstly, in order to frame the Spanish experience in the context of the EU-28 countries, the total expenditure on benefits that guarantee an income has been divided by the number of people living in households whose income is below the poverty line (60% of the median income per adult equivalent). It is, therefore, an indicator of the intensity with which the public system protects the low income population. This comparison, however, must be treated with caution because the benefits are not entirely homogeneous across countries, nor do they include the set of instruments used to support people without resources.

In a European comparison, Spain is close to the mid-point in the ranking of the annual spending on welfare benefits given the number of people below the poverty line.

A second noteworthy feature is that the value of the indicator is almost unchanged since 2008, whereas in the vast majority of cases (22 countries) the protective intensity of the guaranteed income system has increased significantly in response to the economic crisis. Spain is in the intermediate group of countries, a fair distance behind those that offer greater protection, which are the vast majority of countries with a higher per capita income. Our country is also a fair distance from the least generous nations in the payment of these benefits, which are essentially those in Eastern Europe. 

As stated above, the picture painted by the comparison with Europe should be treated with caution. In fact, the position of Spain is quite different when looking at indicators that can illustrate the scope of public intervention through financial welfare benefits.

Firstly, the expenditure on benefits has not remained stable, as the European comparison figures seemed to indicate. The evolution of the indicator for total expenditure on guaranteed income benefits as a proportion of GDP is strongly characterised, logically, by the countercyclical nature of many benefits, with the number of beneficiaries growing when the economy contracts and falling in the expansion phases.

According to data from the Ministry of Employment and Social Security and the Ministry of Health, Social Services and Equality, expenditure on the package of benefits in the guaranteed income system fell from 1.8% of GDP in 1997 to 1.1% ten years later. Subsequently, with the deterioration of the economy and employment, this expenditure rose rapidly, reaching 2% of GDP in 2010, and remained at this level until the return to economic growth. This recovery marked the beginning of a new fall to 1.8% of GDP in 2015.

2. Adequacy of benefits

A second indicator of the effectiveness of public policies is the adequacy of the monetary benefits, which provides a measure of their capacity to meet the basic needs of the recipients. The most direct and normal way to measure the adequacy levels of benefits that seek to guarantee income is to compare them with the poverty line for each type of household.

For the three instruments analysed (non-contributory pension, active insertion income and minimum income), the figures seem to indicate an improvement in the coverage offered by this benefit.

Thus, for example, in the year 2008, the non-contributory pension was equivalent to almost 55% of the income established at that time as the poverty line for a single-person household, whereas eight years later this pension was equivalent to almost 63%.

However, this apparent improvement in coverage is not the result of an increase in benefits, but rather due to a reduction in the poverty line. In reality, the crisis has caused this figure to fall noticeably since 2008.

In any case, the guaranteed income benefits included in the comparison are clearly insufficient to meet the risk of poverty, and in all cases are less than 66% of the poverty line. This gap is even greater when the household size increases, as is the case of couples with children. In these households, the adequacy levels are below 45% of the average of minimum wages, and do not reach 30% in the case of active insertion income.

Comparing the size of benefits with the poverty line also allows us to compare ourselves with other European countries.

The figures from the European Union Survey of Income and Living Conditions (EU-SILC) allow the poverty lines for the different household types to be calculated for all EU countries. There is also relatively homogeneous information on the size of benefits in each EU Member State.

The figures referring to guaranteed income benefits include very detailed information on the basic amounts of the general minimum income systems and the different existing supplements.

However, as in the previous section, it should be noted that the comparison may not be entirely perfect since, in addition to the basic minimum income benefit, various countries add supplements that take into account a wide variety of personal and family characteristics (age, illness, cost of living, educational needs, medical expenses and many other circumstances) and these are not always easily identifiable in the data available.

In any case, if we compare the European countries on the basis of the adequacy of the minimum wage in relation to the income set as the poverty line for a household of two adults and two children, the first thing that stands out is the big differences between countries. Of the 24 countries for which there is information available on the adequacy of the safety net, the average minimum regional wage (value taken for Spain because this benefit is determined by the Autonomous Communities) places Spain in 19th place.

There are some Nordic countries, such as Denmark, that can boast of the great adequacy of benefits, as they almost completely cover the risk of poverty. Others, like the Anglo-Saxon countries, have indicators close to 75%. The Central European countries generally offer average adequacy levels: between 50% and 70% of the poverty line. In the case of the average results for Spain, these are noticeably lower than most countries around us.

Although there are regions that would appear in the mid-low area of the ranking, and some that would even be in the upper part, such as the Basque Country and Navarre, for most regions the adequacy indicators are very low in the European context.

3. Monetary benefits and reducing poverty

The third type of indicator to measure the effectiveness of policies assesses the capacity of monetary benefits to reduce poverty.

In this case, the most common procedure to quantify this effect is to compare the poverty indicators (based on household disposable income) with the values of those same indicators were welfare benefits not to be provided.

This procedure has its limitations, given that it obviously does not take into consideration any possible changes in behaviour households would make if they were not to receive benefits. However, even taking into account this limitation, it can be a valid exercise allowing us to compare differences in the ability of benefits to combat poverty at different times or between countries.

In fact, it is one of the indicators used to monitor progress in the social development objectives of the European Union.

Firstly, the results of the analysis show that the ability of benefits to combat poverty increased during the crisis period.

As in the previous case, the real reasons for this improvement are not found in any increase in the size of benefits, but rather in the overall fall in income, which contributed to the monetary benefit system having a greater impact on the economic position of Spanish households.

In any case, this capacity is limited and has not improved in recent years when the employment and economic activity indicators have started to recover.

The monetary benefits package is insufficient to eliminate the monetary risk of poverty, given that it reduces poverty to levels that are close to half of the value prior to receiving these benefits. It should be noted that a very significant part of that reduction is due to the notable impact that pensions have on the income of many households. If this effect, which largely reflects a redistribution of income over the life cycle, is discounted, the reduction of poverty due to benefits reduces significantly.

The data from Eurostat allow us to compare the po­sition of Spain for this measure. 

Of the 27 countries included in the comparison, Spain is in 22nd position, which is well below both the European average and also the average for countries with a lower level of per capita income. However, during the crisis the poverty-reducing effect of benefits in Spain increased more than in other countries, due mainly to the greater increase in unemployment and the sharp fall in the level of income.




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