CORONAVIRUS

Spain approves guaranteed minimum income scheme for vulnerable families

Here is an overview of who will be eligible for the program, how it will be managed and how it will be funded

Spain's Social Security Minister José Luis Escrivá.
Spain's Social Security Minister José Luis Escrivá.EFE

The Spanish Cabinet on Friday approved a guaranteed minimum income scheme set to help 850,000 vulnerable families. It is not the first welfare program of its kind in Spain: there are already 17 different schemes in Spain run by each of the regional governments. But the distribution of this aid is very uneven and only reaches around 300,000 homes. The new scheme from the Social Security Ministry will nearly triple that figure. It will also be compatible with existing regional aid, according to Social Security Ministry José Luis Escrivá.

Speaking at a press conference on Friday, Finance Minister María Jesús Montero called the guaranteed minimum income scheme “a giant step in the fight against inequality in our country.” The program aims to lift around 1.6 million people out of extreme poverty, a group that represents 12.4% of the population, compared with the EU average of 6.9%. And 26.1% of the population is at risk of poverty, meaning that they are living on less than 60% of the median income, or €8,871 a year.

“Today is a historic day for our democracy,” added Deputy Prime Minister Pablo Iglesias, who is the leader of the leftist Unidas Podemos, at the press conference. “Today this government is showing that its political choice is social justice and that it takes the [Spanish] Constitution seriously.”

The plan for a guaranteed minimum income dates back to December 2019, when the Socialist Party (PSOE) and Unidas Podemos struck a governing agreement after the inconclusive results of the November general election. In this deal, the parties agreed to create “a general mechanism to guarantee earnings for families with no or low income.”

The coronavirus crisis accelerated the plan and in April, the government released the first details of the minimum income scheme, which is set to cost the government €3 billion a year. Drafts of the welfare program have been seen by several ministries, regional governments, social organizations and even associations that work with potential recipients. These texts are not final, meaning some of the details may change when the royal decree is published in the Official State Gazette (BOE). This is what is known so far about the minimum income scheme and how it will work.

Who is eligible?

To be eligible, claimants will have to be of legal age and under 65, given that above that age there are non-contributory pensions that pay out a minimum of €462 a month. If the beneficiaries live alone, they must have been emancipated for at least three years and be at least 23 years old, according to a draft to which EL PAÍS has had access. Other drafts set the age at 21. If the claimant has been a victim of abuse or human trafficking, this requirement is omitted.

In theory, the payment will be made out to a single individual, but destined to the entire household. To be eligible, families must be in a vulnerable financial situation. A family is defined as vulnerable when their monthly income is €10 or more below the minimum income for their situation.

Are migrants eligible?

Yes, migrants who have been living legally in Spain for at least a year can apply for the guaranteed minimum income.

How much is the minimum income?

There is not a set amount, as payment depends on a family’s income and their overall situation. 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.

How is a family’s income calculated?

A family’s earnings are calculated based on their net income from the previous year. This does not include grants or rental assistance. Given that this method could leave out the economic victims of the coronavirus crisis, the latest draft of the scheme includes an additional provision which takes into account a claimant’s income from this year. This provision will be in place for all of 2020. The decree also considers setting conditions to assess an individual’s loss of income in a year, so that they do not have to wait for the following year to claim the minimum income.

A family’s assets, such as property and savings, is also calculated toward their income. But this does not include the family home.

Do claimants need to be looking for work?

Social Security Minister Escrivá has said on many occasions that it is his intention to make the minimum income scheme compatible with paid work as a way of fighting against work poverty. Those who are not employed must be registered as job seekers in public employment offices. This requisite has been rejected by the Association of Social Services Managers, who argue that many of the main potential beneficiaries are unemployable due to their personal circumstances, such as drug addiction and mental health problems. The document opens the door to allowing some exceptions to this rule, but it must be done through a new regulation.

Who will manage the scheme?

The National Social Security Institute (INSS) will be in charge of managing the scheme in all regions of Spain except Navarre and the Basque Country, where the government has reached a deal with the Basque Nationalist Party (PNV) to give the region control of the welfare program.

From next year onward, another 15 regional authorities could reach an agreement to also manage the scheme.

How will it be funded?

The figures provided by Escrivá suggest that the program will cost around €3 billion a year, to be funded through government transfers to the Social Security system. In order to get local governments involved in managing the program, these will be allowed to add a 5% expense in personnel costs.

English version by Melissa Kitson.