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Sección La situación en España

The situation in Spain

The analysis contained in this report examines three different subdimensions or challenges that cover the essential aspects of what needs to be measured: firstly, if people have sufficient and stable sources of income; secondly, if they maintain an economic-financial balance and prevent overindebtednesss; and thirdly, if they avoid severe poverty.

The information collected leaves little room for doubt about the problems in Spain in each of these dimensions. Practically all indicators have worsened since the middle of the last decade, and the progress achieved in the short period since the end of the crisis has not managed to substantially compensate for the decline recorded during the years of the crisis.

1. First challenge:

To have sufficient and stable sources of income

This challenge is measured with the indicators that we show below. The interpretation of the figures is explained in the rest of the section.

The economic welfare of the population depends not only on the level of production or income, but also on how this is distributed among families. One of the possible adverse effects of inequality is that many households live with an income that is clearly lower than that received by a standard family. These households, even if their basic needs are covered, find themselves in a situation of economic vulnerability that often entails hardship and having to go without. In addition, their income cushion to deal with new needs or unforeseen situations is limited, which generates insecurity.  

Many of these families also fail to earn enough to avoid the risk of poverty. The risk of falling into poverty increases when family income is below 60% of the median income, according to the standard agreed in the European Union. In Spain, more than a fifth of the population is in that situation, a figure that is higher than in almost all other European countries. Although the proportion of the population at risk of poverty was already high ten years ago, the economic crisis has further worsened the situation, mainly due to the losses suffered by households affected by unemployment. In order to reduce this risk-of-poverty indicator, there is a need not only to create employment but for that employment to allow workers to earn sufficient salaries. It is also important to improve the effectiveness of redistribution policies, increasing the coverage and sufficiency of benefits aimed at groups that are currently poorly protected, such as low-income households with dependent children.

VULNERABILITY THRESHOLD AND MONTHLY EXPENSES

The vulnerability threshold (75% of the median) in 2016 for a family comprised of a couple with two children under the age of 14 is a monthly income of around €1,800 (12 payments).

This figure is 65% of the €2,800 earned by median) in 2016 for a family comprised a standard household of this type in our of a couple with two children under the country. age of 14 is a monthly income of around €1,800 (12 payments).

 

The crisis has also increased the percentage of families who lack regular sources of income from work (salaried or self-employed), a pension or unemployment benefits. The increase in unemployment has naturally influenced this lack of the normal sources of income, but so has the weakness of the so-called "safety net" of social protection, aimed at guaranteeing a minimum income when the right to contributory benefits ends.

Together with the possibility of having sufficient sources of income, people value the stability of these over time. A modest but secure income may provide greater economic welfare than a higher but uncertain income. Job insecurity and unemployment, comparatively high in Spain, may negatively affect this social need. Although the most recent figures point to some improvement in this indicator compared to the core years of the crisis, many people still live in households whose income has been significantly reduced over the last year.

Personal economic independence is also a value desired by most adults. Although the consumption capacity and standard of living of household members depends above all on the combined income of the family unit, having their own income improves individual independence, provides freedom and increases bargaining power within the family. This indicator has also worsened to some extent with the crisis, due to the lower number of income earners, but the most significant aspect is the persistence of a large gender gap. Reducing this gap requires the adoption of measures that remove the obstacles that reduce the participation of women in the labour market and limit their professional progress.

LACK OF ECONOMIC INDEPENDENCE: MANY MORE WOMEN THAN MEN

Regardless of the age range considered, many more women than men lack their own income or earn less than the IPREM (around €535 a month). This difference is due to the employment and salary gap between men and women, as well as the unequal distribution of domestic and care tasks.

The gender imbalance in economic independence also occurs in other European countries, although to a different extent: in Denmark, Sweden and Finland there are hardly any differences between men and women, whereas these are notable in, for example, Belgium, Germany and the Netherlands. 

2. Second challenge:

To maintain an economic-financial balance and avoid indebtedness

This challenge is measured with the indicators that we show below. The interpretation of the figures is explained in the rest of the section.

When examining the degree to which people and families manage to maintain a balance between income and expenses, the first relevant indicator is the degree of economic dissatisfaction of the population. People who live in households whose income is less than 90% of their subjective needs to make ends meet constitute practically a third of the total. This imbalance not only creates financial tensions within the home, but also stress and anxiety which may lead to mental health problems.

The percentage of households saying that they find it difficult to makes ends meet increased significantly during the crisis. Given that this indicator can be interpreted as a measure of the financial pressure experienced by households in different situations, the fact that more than a quarter of the population is in this situation means that we need to reflect on the inadequacy of a high percentage of the salaries received. The flow of income, mostly from the labour market, is insufficient to finance the expenses for one out of every three people.

As a result, almost 30% of the population live in households that regularly dissave, that is, in order to meet their bills they use the savings they have at that time or have to borrow money. Although dissaving may allow families to temporarily sustain their consumption in periods of low income, spending more than they earn means reducing their wealth or incurring debt. Therefore, the dissaving rate indicates that a significant proportion of the population is worsening their economic position and may find it difficult to guarantee their economic situation in the future.

That dissaving, if it occurs repeatedly, gives rise to problems of overindebtedness. This process does not only depend on the level of income, as it varies depending on the point in each person's life cycle and the income and expenses of the households.  The figures show that, in the boom period prior to the crisis, in a phenomenon linked to the housing bubble and the ease of access to credit, Spanish households were taking on a great deal of debt, believing themselves capable of making the repayments for these burdens in the long-term. It should be noted that excessive debt may reduce welfare and cause serious problems of insecurity and economic stress.

3. Third challenge:

To avoid severe poverty

This challenge is measured with the indicators that we show below. The interpretation of the figures is explained in the rest of the section.

Avoiding situations of severe poverty is a fundamental challenge to improve material living conditions and meet the most basic social needs. Material deficiencies are, however, a daily reality for a large proportion of Spanish society. Material living conditions clearly improved in the years immediately prior to the crisis, and worsened as it took hold. It is often thought that material deprivation indicators change more slowly than those for monetary poverty. However, the recent crisis had an early impact on these indicators.

Among other effects of the crisis, some that stand out are the increase in the difficulty of replacing old clothes, having a small amount of money to spend on oneself, as well as the worsening of the indicators relating to having a social life. This increase reflects the difficulties faced by a growing number of people in maintaining their social participation levels. On the other hand, indicators such as not being able to have a week's annual holiday, linked to situations of lesser severity, or not being able to replace damaged or old pieces of furniture with new ones, recorded relatively lower increases between 2009 and 2013, although they continued to be the most widespread deficiencies among the population (40%). In all European countries, and Spain is no exception, this was the type of spending that was the first to be cut after the start of the crisis.

It is concerning to note that during the crisis, in addition to increases in monetary poverty and the material deprivation of families, the chronicity of these situations increased to the point where it had doubled. The percentage of individuals living at risk of poverty for three or more consecutive years increased from 6.5% to 13.5% of the population between 2008 and 2016.

People receiving low income over a prolonged period of time suffer more severe long-term deprivation in very diverse areas (employment, salaries, health or social relations), something that must be taken into account in order to properly design anti-poverty programmes.

 

CHRONIC RISK OF POVERTY

Individuals who live for three or more consecutive years in households with a monthly income under the poverty line find it much more difficult to overcome their complicated economic situation. In fact, various studies indicate that in many rich countries, the likelihood of being poor today is almost double for someone who was poor in the previous year. The length of time spent in that situation increases the probability of remaining in it.

The consequences of chronic or persistent poverty are much more significant than those of transitory poverty, particularly for young people as it has been proven that this is related to learning difficulties, anti-social
behaviour, poor health and difficulties finding employment when they are older.

 

The percentage of people who cannot reach a sufficient level of consumption has also increased. Among the basic household needs, not being able to afford the essentials (regularly eating meat or fish or keeping the house at a suitable temperature) is probably one of the most severe. This problem grew during the crisis and, even more worryingly, it has shown very little improvement during the subsequent period of economic recovery.

Finally, another notable feature of the evolution of poverty is the very significant increase in the percentage of the population who suffer from consistent poverty, that is, they suffer from both monetary poverty and material deprivation, a situation that brings with it a special fragility. In Spain, this group grew during the crisis to reach almost 10% in 2016 and 8.8% in 2017.

All these results for deprivation and chronic poverty are probably linked to the increase in long-term unemployment, which has led to more situations of a prolonged lack of income in households. The reduction in the poverty line during the crisis may also explain why in recent years the situations of relative policy are associated with worse living conditions and more severe economic difficulties than before the start of the crisis.

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