Spain approves the Minimum Living Income

Spain approves the Minimum Living Income

“This can be the necessary moment to considerer
a universal basic wage”
Pope Francis

In the year 2017 CCOO and UGT, two trade unions, presented in the Spanish Parliament a Popular Legislative Initiative which its main goal was to establish a Minimum Income Subsidy. Next year, a ministerial council approve an study about minimum wages perks to the independent authority of fiscal responsibility, which has as a result the report “the problem of the minimum wages in Spain”. Also, in 2017, the European Pillar of Social Rights recommended to Spain that all people who do not have enough resources to live, has the right to a minimum wages perks which guarantee a dignified life”. To support and justify the Minimun Living Income (MLI), the Spanish State Official Bulletin (BOE because of its words in Spanish) in the Royalty Decree-Law 20/2020 of May 29 for it is established the MLI; mentioned in the explanatory memorandum to the organizations Caritas, FOESSA, Red Cross and the Spanish Federation of the Bank of Food (FESBAL for its sign in Spanish), something not so frequent in a legal text of this type: “The main objective of the MLI will be the reduction of poverty, specially extreme poverty and the redistribution of the income”.


Poverty and extreme poverty


In the year 2018 the 16,9% of the EU population, 85 million of people, were living below the poverty line (income below the 60% of the average wages); in Andalucía the percentage was 32% - 2,68 million of people- and in Spain was the 21,5% - 10 million people-. Since 2008, initial year of the previous crisis, the poverty indicators of Spain and the EU have raised a little and the one of the Andalucía has raised higher. The poverty has become chronic. The severe poverty of Andalucía in 2018 affected to 831000 people, the 9.9% of its population and 3.2 million was the Spanish total (6,9%).


The AROPE indicator, the preferred one by Eurostat, which includes people in risk of poverty and/or those who suffer severe material deprivations, and/or those who work below of their 20% of its labour potential, bring to light the high social exclusion in the EU population (109 million of people, 1 out of 5 people), of the Spanish population (12,1 million of people, 1 out of 4) and the Andalusian one (3,2 million, 1 out of 3 people).


Inequalities also present disappointed references. The GINI indices for Spain and Andalusia are three points higher than the European average. Child poverty in Spain is particularly worrying: more than 26% of children under 16 live in households with incomes below the poverty line.

The election of the minimum life income among other options


The wide variety of social tools to combat poverty is very wider, in Spain (with the minimum insertion wages of the Spanish autonomous communities and its variety of benefits, denominations, characteristics, dotation and antiquity) as long as outside Spain (the dual social assistance system of Germany or the integral protection nets) and all of those tolls are fully functional.


It is worth noting the difference between Minimum Income and Basic Conditional or Unconditional Income. The first one includes people or homes under certain requirements: to be in risk of poverty or social exclusion, number of members of the family, patrimony, amount of benefits they receive, etc. depending on the place, the minimum income or basic income can be temporal or permanent and subject to different obligations. Also, the amount on the benefits vary because it is calculated taking as a reference the interprovincial minimum wages, the public indicator of wages of multiple effects or any other poverty indicator. There is not a clear explanation either about why Andalucía, which its population its 4 times the population of Euskadi, have a lower number of receivers of the MLI. The Minimum Wage of Social Inclusion of Andalucía and the Income Guarantee Wage of Euskadi are references, among many others, of the basic conditionals’ wages of the Spanish Autonomous Communities.


The unconditional MLI has as an objective guarantee the minimum level of income which covers the basic needs of people: is individual, universal and unconditional, because it is independent of the economic resources or the labour situation of the beneficiary. The people in favour of this estimate that it is a good toll to end poverty. In this category is included the Unconditional Basic Wage, Universal Fiscal Wage, or the Negative Income Tax. Neither one of these options is analysed in this report.


The vasque institution ISEAK has recently published the report “Poverty and inequality in Euskadi: the role of the Income Guarantee Wage” of the period 2008/2918 that due to its interest in the context of this article, we resume as follow.


The main impact of the IGW on Euskadi have been:
1.    The number of people in risk of poverty and extreme poverty have raised in Euskadi between 2008 and 2918 (also in Spain and Andalucía), due to the economic crisis. Without the IGW, the poverty would have raised on 61.262 people and the extreme poverty on 39.986 people.
2.    The poverty intensity (distance of poor people with respect of the line) as long as the inequality have growth between 2008 and 2018, but the result would have been different without the IGW.


Arguments in favour of a Minimum/Basic Income


After the 2008 crisis many of the traditional mechanisms of the state of wellbeingalso suffered from the crisis or stop from being useful because leave many vulnerable communities unattended. Also, the continuous technological revolution and the globalization accelerate the productive delocalization, questioning the formation programmes, activating the migration flows and the rigidity of the job market; all of those had positive and negative consequences on the jobs and the income of the more vulnerable communities.


Three arguments justify the election of the minimum/basic income as an tool that guarantee a reasonable level of income to people/homes with low resources: the growing and chronic poverty created by the 2008-2018 crisis, the job market transformations and the insufficiency of the traditional social subsidies that guarantee a minimum level of income.


As has been already analysed the problem of absolute or severe poverty, lets focus now on the job market transformations in the developed countries and specifically in Spain which had, among other, the following consequences:
- Reduced income levels for workers of low qualification or formation.
- Insufficiency on the unemployment subsidies.
- Precarious, flexible, rubbish or low-income jobs.
- A new labour category: poor with job.
- Long term unemployment people with scarce income protection or without any.
- New types of contracts (partial time, temporary…) with scarce stability or without stability at all and with reduce wages.
- Scarce social perks for autonomous workers.


The inadequacy of traditional social benefits also opened the door to basic income/insertion minimums. It is clear that if ordinary social benefits had been sufficient, there would have been no need to think of other compensatory instruments. During the last decade, the Autonomous Regions, the City Councils and the Central Government have approved a variety of social programs, which have proved to be insufficient (without ignoring the positive effects) to stop/reduce the indicators of poverty, which has become chronic, intense and generalized.


Alfonso Rodriguez Sanchez de Alva
Retired Professor at the University of Seville