Fedea highlights that changes to the unemployment subsidy for those over 52 have led to higher public spending and reduced motivation to return to work. The reform has significantly increased the number of beneficiaries.
The 2019 overhaul of Spain’s unemployment subsidy for people over 52 has triggered concern from Fedea, a leading economic research foundation. According to their latest analysis, the reform has not only driven up public expenditure but also made it less attractive for older jobseekers to re-enter the workforce, especially in lower-paid or part-time roles.
Fedea estimates that the additional cost of the expanded subsidy will reach nearly €18 billion between 2019 and 2030. The number of recipients is projected to rise by 315,000 over this period, with the share of beneficiaries in 2030 expected to be 37 percentage points higher than if the previous rules had remained in place.
The 2019 changes reversed several restrictions introduced after the 2012 financial crisis. The minimum age to qualify was lowered from 55 to 52, eligibility was broadened by assessing only individual income rather than household income, and the duration of the subsidy was extended, allowing many to receive support until retirement. Additionally, the Social Security contribution base was raised to 125% of the minimum wage.
While the original aim of the subsidy was to provide a safety net for older workers struggling to find new employment, Fedea’s report suggests that the current system often bridges the gap between job loss and retirement, rather than encouraging a return to work. The think tank also points to a potential fairness issue, as the reform disregards family income, focusing solely on the applicant’s earnings.
Spain’s demographic landscape has shifted sharply over the past two decades. The population over 50 has grown by 6.8 million, now representing 42% of all residents. The number of employed people in this age group has doubled, reaching 8 million by 2029, or 36% of the workforce. However, this trend has also led to more older people facing unemployment and relying on assistance. Nearly 60% of jobless individuals in this age bracket now receive means-tested benefits, reflecting longer periods out of work.
Efforts to address social exclusion and improve access to welfare have been seen in other regions as well. For example, Catalonia recently allocated €30 million to identify families missing out on social aid, aiming to add thousands to the welfare system by 2029. More details on this initiative can be found in the article about Catalonia’s targeted investment in social benefits.
Fedea’s findings highlight the complex balance between providing adequate support for older workers and maintaining incentives for labor market participation. As Spain’s population continues to age, the sustainability and design of such subsidies remain a pressing issue for policymakers.
