ECONOMY & BUSINESS

Spain’s guaranteed minimum income scheme set to assist 850,000 families

The measure is due to be approved by the government this week, and is aimed at helping 2.3 million at risk of poverty at a cost of €3 billion

Social Security Minister José Luis Escrivá in a file photo.
Social Security Minister José Luis Escrivá in a file photo.EFE

Spain has had a pending task when compared to other developed countries: poverty and how to combat it. A glance at the international statistics is enough to prove that: 21.5% of the population is at risk of poverty, compared to the 17% average in the eurozone. What’s more, the policies that exist to correct this problem have not been efficient.

The coalition government – led by the Socialist Party (PSOE) and junior partner Unidas Podemos – is seeking to solve these problems with a guaranteed minimum income scheme, as has been announced repeatedly by Social Security Minister José Luis Escrivá.

The coronavirus pandemic has sped up the implementation of guaranteed basic income

Since the government made clear that it was looking to have the scheme ready by this month, the numbers have changed somewhat. At the outset, there was talk of the scheme benefiting a million at-risk households, in which around three million people live. But now the scheme is set to reach 850,000 families, made up of some 2.3 million people. The estimated cost, meanwhile, is around €3 billion.

What will be agreed tomorrow at a Cabinet meeting is not yet clear, but as Prime Minister Pedro Sánchez announced on Saturday, the scheme will be launched this week. The plan was the star measure of the coalition government, and the plan was to launch it during the political term. But while the coronavirus crisis has brought labor, fiscal and pension reforms to a halt, the pandemic has sped up the implementation of guaranteed basic income.

But the process has not been without its conflict in the government. In April, Unidas Podemos leader and Deputy Prime Minister Pablo Iglesias wanted to launch an extraordinary benefit scheme to help victims of the economic effects of the coronavirus crisis who had been left with no income.

Escrivá, an economist who already had a project prepared from his time as the head of Spain’s Independent Authority for Fiscal Responsibility, argued that the work to roll out an extraordinary payment and a structural one was the same. He also pointed out that the majority of the collective who would benefit from the scheme were the same people who had been struggling before the coronavirus crisis arrived. This was the direction the coalition government opted to take, in exchange for an acceleration of the process, so that it would be approved in May and ready to be rolled out in June.

A lot of the details of the scheme have been made public. For example, the benefit will guarantee a minimum income for households according to their family situation. Drafts of the legal text define up to 14 types of family, something that was confirmed on Sunday by Escrivá in an interview with El Periódico de Cataluña. The lowest rate will be €462 a month for adults who live alone, and the highest €1,015. But the scheme will complete family income to those levels, rather than paying out that amount.

To be eligible, claimants will have to be of legal age and under 65, given that above that age there are non-contributory pensions, which pay out a minimum of €462. If the beneficiaries live alone, they must have been emancipated for at least three years and be at least 21 years old, according to a draft to which EL PAÍS has had access.

The lowest rate will be €462 for adults who live alone, and the highest €1,015

As for means testing, the initial government plans include using past years’ tax returns of beneficiaries. But sources from Social Security say that they are trying to find more recent references to include those who have suffered from the economic consequences of the coronavirus crisis. Assets will also be taken into account, but this will not include the usual family residence.

When it is implemented, the guaranteed basic income scheme will not be the only assistance in Spain aimed at combating poverty. All of the regions, which have powers for social assistance under the Constitution, offer some kind of welfare schemes. They reach around 300,000 homes, but their distribution is very uneven. According to data from the Association of Directors and Managers of Social Services, in the Basque Country, benefits reach more than 70% of those in poverty, and in Navarre, 66%. In Castilla-La Mancha, however, the figure is as low as 2%. The average in Spain is below 10%.

Both of these schemes will be compatible, but it is fitting them together that is causing most work for the government. Some regions are distrustful of the fact that the Social Security system will administer the scheme, and it is not out of the question that appeals could be filed with the Constitutional Court once the decree is approved by the Cabinet and parliament. The government, meanwhile, has defended its powers to act in this area and points out that assistance for dependent children is also paid out by Social Security.

English version by Simon Hunter.

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