Executive summary and conclusions
One of the most important advances in our understanding of the social situation has been the development of much more complete and regular databases than those that existed no more than two decades ago. Currently, in most European countries there are surveys and administrative records that allow for a much more accurate identification of the real picture of social needs, a task that the "la Caixa" Banking Foundation will address in various reports.
This abundance of information does not mean, however, that the leap from the availability of data to the interpretation of achievements and setbacks in the satisfaction of those needs is immediate. On the one hand, it is necessary to standardise the information offered by the different databases into a consistent set of indicators, which is sufficiently representative and of an appropriate size. On the other, most studies on social needs are limited to the exhaustive use of just some of the sources available, given the problems involved in the harmonisation and sharing of the primary information in the respective databases.
The aim of this report, the first in a collection on the measurement of social needs in Spain, in the different aspects that constitute welfare, is precisely to try to represent the scale and characteristics of the needs related to economic welfare and the living conditions of Spanish households through a basic set of new and significant indicators. Using these indicators, we aim to provide society with an account of the material welfare of the population based on all available sources. These, among others, include the Living Conditions Survey (Encuesta de Condiciones de Vida), the Family Budget Survey (Encuesta de Presupuestos Familiares) and the Active Population Survey (Encuesta de Población Activa), all from the National Institute of Statistics, and the Financial Family Survey (Encuesta Financiera de las Familias) from the Bank of Spain.
The report uses a triple challenge as the focus for monitoring social material needs: having sufficient and stable income, maintaining an economic-financial balance that limits problems of overindebtedness and avoiding severe poverty.
The fact that we have comparable information for different points in time, before and after the financial crisis, allows us to answer the first general question, about where are we now and how have we evolved in the three aforementioned challenges. Pre-empting what readers can find on the following pages, the portrait is enlightening: practically all material conditions of life have worsened since the middle of the last decade. Moreover, in contrast to the widespread belief among many decision makers and the public that welfare problems are essentially determined by the economic cycle, even in the recovery stage following the crisis the levels of these conditions remain far from their position before the start of the great economic slowdown.
ECONOMIC AND MATERIAL WELFARE
This first report measures the social needs related to economic and material welfare. Every person and household faces three fundamental challenges:
1. Having sufficient and stable sources of income: the only way to ensure that personal and family needs are covered is to earn sufficient income to reach a decent standard of living.
2. Maintaining an economic-financial balance that limits problems of overindebtedness: if families do not manage to maintain a suitable balance between income and expenses they will inevitably reduce their capital or incur debt and this will make it more difficult for them to maintain their economic situation in the future.
3. Avoiding severe poverty: preventing poverty constitutes one of the main social challenges in developed countries to improve the material living conditions of the population.
In the report we also compare the position with that of Europe by selecting indicators to represent each challenge. In all of these, Spain has fallen down the rankings during the last decade. Again relating the country's economic capacity to the coverage of social needs, the report shows that Spain's position in all the rankings is clearly lower than one would expect given its average level of income.
As the third question, we also examine, again through a proposal for indicators, the response of public policies to these needs. Readers will find very specific figures that again summarise some of the particular features of the way in which the needs impact on material conditions. The consequence of the lower amount of resources invested and the gaps in the protection system is that Spain is one of the countries with the least capacity to cover the social needs analysed in the report.
Summarising the information through a basic system of indicators, letting the figures almost speak for themselves and qualifying the story with brief specific comments that help with the interpretation, is a new addition to the range of studies on the social position. It is now up to the reader to browse through the pages of the report and construct their own story, reexamining what are normally opinions and assumptions in light of a new and broad set of objective figures.
1. Executive summary
The most important
- More than one in every five people are below the risk-of-poverty threshold, a figure that is well above that seen in the vast majority of European Union countries, including several with a lower income level than Spain.
- Almost one in every three people earns an income which they consider lower than necessary to cover their expenses. This financial imbalance can lead to stress and anxiety.
- Job insecurity and unemployment result in many people facing significant drops in their income each year, which generates great economic instability and insecurity. In parallel, low incomes and their instability also considerably hinder the processes of personal independence.
- The crisis led to a rapid deterioration in the ability to meet the most basic social needs. Added to this are increasing difficulties to improve social relations and the growing percentage of people who cannot afford to buy even the essentials.
- The increase in situations of prolonged poverty raises alarm bells about future levels of economic and material welfare.
The most important
- The trend in economic vulnerability problems is especially worrying as Spain was already among the lowest ranked countries in the European Union before the crisis.
- In all the indicators selected as representative, Spain has fallen in the rankings over the last decade.
- In all indicators, the position of Spain in the rankings is clearly not what one would expect given its income level, being ranked below other countries with a lower economic capacity.
The most important
- There have been no clear improvements in the protective intensity of the system.
- The resources invested in the monetary benefits system are lower than in other countries.
- The amounts paid are well below the poverty line.
- Spain is one of the countries where the capacity of the benefits package to reduce monetary poverty is lowest.
1. Material living conditions are worsening in Spain.
Practically all indicators chosen to measure the state of social needs in terms of material living conditions have worsened since the middle of the last decade. This pattern of change reflects a significant reduction in the levels of welfare in Spanish society and the limited progress made in the short period of economic recovery since the end of the last crisis has not managed to compensate for that reduction.
2. Significant presence of monetary poverty
One of the features that most demonstrates the critical situation in terms of the difficulties in having sufficient and stable sources of income is the significant presence of monetary poverty in Spain. For more than one out of every five people, household disposable income is under the risk-of-poverty threshold, implying that the scale of the problem is well above that seen in most European Union countries, including some with a lower level of income than Spain. This indicator was already noticeable before the economic crisis, but its intensity and prolongation has resulted in it increasing even more. The crisis has also led to a drastic increase in the number of households without regular sources of income, due to the progressive exhaustion of unemployment benefits.
3. Economic instability
The problems of insufficient income are combined, in many cases, with other deficiencies and disadvantages. Although the most recent figures indicate a certain improvement, job insecurity and unemployment produce a significant number of situations in which many people (between 10 and 15% of the total) face significant drops in income each year, generating great instability and economic insecurity.
In parallel, low incomes and their instability considerably hinder the personal independence of more than a quarter of people older than 25 in Spain. There is also a pronounced gender gap in the levels of economic independence, so it is urgent to adopt reforms to eliminate the obstacles that limit career progress for women.
4. The economic recovery is not leading to social recovery
From the evolution of the long-term figures it can be deduced that the recovery in the economy, while it may reduce the difficulties in obtaining sufficient and stable income, will not achieve the progress sought in this field on its own. In order for higher employment levels to lead to a significant reduction in the risk of poverty, the working conditions for a large segment of the population must be improved, in addition to increasing the coverage and adequacy of benefits aimed at currently poorly protected social groups.
5. Dissatisfaction, stress and anxiety
Another clear example of the emergence of new needs linked to material living conditions is the growing level of economic dissatisfaction in Spanish society. Almost one in every three people earns less income than they consider necessary to cover their spending. This financial imbalance may fuel situations of stress and anxiety.
6. Lack of financial balance
This situation is corroborated by other indicators for the financial pressure experienced by households in different situations, such as the fact that more than a third of the population have difficulties in making ends meet and the similar percentage of the population living in households that regularly dissave. That a significant proportion of the population has problems achieving a balance between what they spend and what they earn not only affects their future economic situation but also the very financial balance of Spanish society, burdened by excessive indebtedness. The problem is also fueled by the difficulty that Spanish households have in understanding the need to adjust their expenditure to their income, especially in the expansionary phases of the economy.
7. Basic material needs on the rise
In addition to the poor results from the monetary indicators, we also see problems, deeply rooted in the social structure, with the other material living conditions. The crisis led to a rapid worsening of the ability to satisfy the most basic social needs, accentuating problems related to household items and basic consumption as a characteristic feature of Spanish society. Of special importance is the poor performance of the indicators related to both social life, a symptom of the growing difficulties of large groups to maintain their social participation, and the level of consumption, given the seriousness of not being able to afford basic expenses.
8. Chronic poverty
The worsening in overall living conditions is related to some processes that lead to the impoverishment of society becoming chronic. The longer duration of risk of poverty situations, which has increasingly affected a large number of households (close to 14% of the Spanish population has been living in poverty for over three years), raises alarm bells over future levels of welfare, as spending prolonged periods in this situation is an almost certain guarantee of more serious deficiencies in the long-term in almost all fundamental dimensions for the coverage of social needs (employment, salaries, health or social relations).
9. Spain falls in the international rankings
The overall deterioration shown in the evolution of the indicators is also revealed when the figures from Spain are viewed in the light of the experience of its closest neighbours. In all indicators selected as representative of the different sub-dimensions analysed, Spain has fallen in the rankings over the last decade. Especially negative is the trend in economic vulnerability problems, given that before the crisis Spain was already among the countries with the highest values. It should also be noted that in all indicators, Spain's position in the ranking is clearly lower than it should be given its average level of income. In each case it is ranked lower than many countries with a lower economic capacity.
10. Deficient monetary welfare benefits
One of the main reasons for this very unfavourable situation is the weakness of the monetary benefits system. The resources invested are lower than in other countries; there have been no improvements in the protective intensity of the system, in contrast to that seen in neighbouring countries, and the amounts paid are well below the poverty line. It is not unexpected to find that Spain is one of the countries with the worst results in terms of the capacity of the benefits package to reduce the scale of monetary poverty.
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Inequality in income distribution
Between the years 2007 and 2017, inequality in Spain increased, with a Gini Coeficient (not including social transfers) that has increased in value from 45 to 50
Households with very low work intensity and dependent children, greater risk of poverty and social exclusion
Some 79.3% of households with children and with very low work intensity were at risk of poverty in 2017. Does this figure exceed the European average?
Social transfers targeting children: the best way to fight child poverty?
In Spain barely 3.3% of the total of social transfers in the year 2016 targeted children, against the European average of 9%. However, this study shows that it is the most effective way of eradicating poverty.
The CaixaProinfancia programme supports families in a situation of poverty with academic reinforcement, grants for food and hygiene, leisure, psychotherapeutic care and family educational support.
The high price of inequality: lessons on the costs and consequences of child poverty in advanced societies
The books reviewed here consider why it is important for everyone, and not just for the most vulnerable, to achieve more egalitarian societies.