Statement by Professor Philip Alston, United Nations Special Rapporteur on extreme poverty and human rights, on his visit to Spain, 27 January – 7 February 2020

Spanish version

Madrid, 7 February 2020

I. Introduction

Spain is thriving economically; half of its population is not. The EU’s fourth largest economy has enjoyed consistent GDP growth since the economic crisis, unemployment is falling, average wages are increasing, and exports are growing.¹ But almost half the Spanish people rank unemployment and economic insecurity as their top concerns.² During my almost two-week country visit to Spain, it has become abundantly clear that the post-recession recovery that has been so good for some has left many people behind, and that all too little has been done for most members of that large group.

Spain finally has a new government, one with high hopes and impressive ambitions, especially in the social sphere. But it confronts daunting challenges. The country has high unemployment, chronic youth unemployment, a housing crisis of stunning proportions, deep widespread poverty, largely inadequate social protection arrangements, a segregated and increasingly anachronistic education system, fiscal policies that provide far more benefits to the wealthy than the poor, and an entrenched bureaucratic mentality in many parts of the government that values formalistic procedures over the well-being of people.

If strategic plans, action programs, and voluminous but unreadable reports could solve poverty, Spain would be riding high. But in the absence of a meaningful commitment to uphold people’s social rights to housing, education, and an adequate standard of living, these grand designs will continue to be as ineffectual as they have been over the past decade. Spain needs innovative leadership at the national level, backed up with the resources to encourage autonomous communities to support far-reaching reforms. Poverty is ultimately a political choice, and governments can, if they wish, opt to overcome it.

This report focuses on the key issues that require urgent attention. They include: comprehensive and creative measures to ease the housing crisis, the restoration of decent work conditions especially for low-paid jobs, a national minimum income scheme that ensures a basic standard of living for all in need, an early childhood education program for all children ages 0-3, and far-reaching fiscal reforms to ensure a strong redistributive impact, reduce fraud and avoidance, and make corporate tax arrangements transparent.

The face of poor Spain

Spain is a country with a grand history, a global leader in some areas, and a cultural beacon. But Spain today needs to take a close look at itself in the mirror. What it will see is not what most Spaniards would wish for. The self-image of a close family-based society rooted in deeply shared values and social solidarity has been badly fractured by an economic crisis and the implementation of neoliberal policies. The local and familial safety nets that had been historically important continue to work for the well-off, but have been undermined for a large part of the population. Today, Spain ranks close to the bottom of the EU in far too many social indicators.

Poverty rates are appallingly high. 26.1 percent of people in Spain, and 29.5 percent of children, were at risk of poverty or social exclusion in 2018, among the highest rates in Europe.³ More than 55 percent had some degree of difficulty making ends meet,⁴ and 5.4 percent experienced severe material deprivation.⁵ The unemployment rate of 13.78 percent is more than double the EU rate and the situation for youth is particularly distressing with a 30.51 percent unemployment rate among those below the age of 25.⁶ Employment figures obscure one of the EU’s highest rates of in-work poverty, with many people working in low-paid, part-time or temporary jobs, earning salaries woefully inadequate to cover basic needs.⁷ Inequality is also shockingly high, with indicators well above EU averages.⁸

Behind these numbers are real people experiencing serious hardship. In Galicia, the Basque Country, Extremadura, Andalusia, Catalonia, and Madrid I met with a great many people who are barely scraping by. Many lost their savings during the crisis and others are now in a situation where they have to choose between putting food on the table and heating a home. Far too many are staring down the prospect of eviction, unable to find affordable housing. Almost everyone I met was avidly seeking decent work. I met a widowed single mother in Andalusia who can only find 18 hours of work a week, not enough to provide for her children; a man in Bilbao abused as a child and subsequently homeless who was denied social assistance because he could not get municipal registration (empadronamiento); and a woman in the outskirts of Madrid, raising children in an area deemed hazardous to human health, amidst the smell of nearby waste incinerators and in a house at risk of collapse.

I also visited areas I suspect many Spaniards would not recognize as a part of their country. A shantytown with far worse conditions than a refugee camp, without running water, electricity, or sanitation, where migrant workers have lived for years without any improvement in their situation. Closed-off neighborhoods of concentrated poverty where families raise children with a dearth of state services, health clinics, employment centers, security, paved roads or legal electricity. A segregated school in a poor neighborhood with a 100 percent Roma student body and a 75 percent rate of early leaving. I was struck by the resilience and compassion of the people with whom I met, who showed real generosity by sharing often quite personal experiences with me in order to inform this report.

The single word that I heard the most over the past two weeks is “abandoned.” People felt abandoned in a rural town without any public transportation to visit the doctor, no money to pay for private transport, and unsure if an ambulance would come when needed. Abandoned in a stigmatized low-income suburb that the police avoid. Abandoned to unscrupulous landlords, unconscionable rent raises, or unmaintained public housing. And abandoned to an arbitrary bureaucratic system that suddenly denies or revokes vital support without explanation. The common thread was an absence of government support to ensure that people do not needlessly experience the worst effects of poverty, a situation many face because of phenomena largely beyond their control like job loss, structural discrimination, or illness.

People feel abandoned for good reason. The benefits of the economic recovery have largely flowed to corporations and the wealthy, while the public services and protections that were severely curtailed after 2008 have in many regards not been restored. Income growth has been primarily captured by those at the top of the income distribution. Between 2007 and 2017, the incomes of the top 1 percent grew by 24 percent, while the bottom 90 percent experienced below average income growth of 2 percent.⁹ Corporate profits have largely recovered since the crisis but corporate tax revenue fell by half between 2007 and 2019, from 22.3 percent of total tax revenue to 11.9 percent.¹⁰ Prior to the crisis, Spain had been relatively immune to the rising inequality afflicting so many other countries, but since 2010, inequality has exploded.¹¹ With deregulation and hefty corporate tax cuts, it is hardly surprising that the wealthy and corporate interests have fared so well.

In comparison, people in poverty have been largely failed by policymakers. It is abundantly clear that social and economic rights are rarely taken seriously, even if they are frequently invoked in the abstract. People face skyrocketing housing costs, privatization of apartment blocks, and aggressive evictions. Yet low cost social housing is almost nonexistent despite widespread agreement on its necessity. The system for providing social assistance is broken. It ought to play a significant role in reducing poverty, but is remarkably ineffective with wealthy families benefitting more from cash transfers than poor families.¹² The system is fragmented, impossible to navigate, and is not reaching the poor people who need it most. The capacity of existing cash transfers to reduce poverty is among the lowest in the EU.¹³ As many people told me, this is not a system designed primarily to maximize help for struggling people.

I am not the only one to notice this. Last week the International Monetary Fund—hardly a kneejerk defender of the need for adequate social protection—reported that Spanish social assistance programs do not deliver fully on their objectives, that expenditure is low, that gaps in adequacy and coverage stand in the way of reducing poverty, that bureaucratic hurdles decrease uptake, and that the least social assistance is directed to the most vulnerable children and low-income households.¹⁴ This is only the latest in a string of similar findings from domestic and external actors like the Independent Authority for Fiscal Responsibility (AIReF),¹⁵ the OECD,¹⁶ and the European Commission.¹⁷

Many of the politicians and civil servants with whom I met agreed that there are deep structural problems. Poverty and precarity, many acknowledged, are baked into the system. But while the new coalition government is committed to far-reaching reform, and some senior political advisers spoke to me in such terms, too many officials seemed complacent and content to blame “other” parts of the system. Some officials claimed, without providing support, that poverty is not as bad as statistics show because the cost of living is lower in some autonomous communities. Recent increases to the family and child benefit and the minimum wage are important first steps, but are far from adequate in light of the scale of hardship in the country. There is remarkable consensus around the extent of the harm caused by existing housing and social protection policies and what ought to be done, yet precious little action.

I was impressed by the incredible work done by the third sector, which is one of the most vibrant I have ever encountered. I met with many staff and volunteers deeply dedicated to supporting people seeking to achieve economic security and adequate living standards. I also learned a great deal from the information these groups shared with me in advance of and during my visit. But the government has direct obligations to fulfill human rights that cannot be de facto outsourced, and it cannot abandon its own responsibilities to a patchwork of underfunded third sector groups. The latter cannot replace the state, nor can it offer the comprehensive, systematic support needed to fight poverty at scale and ensure that people are protected against the worst of its impacts.

After a prolonged period of instability and policymaking paralysis, the formation of a new government presents an opportunity for change. With its embrace of social rights and fiscal justice, and prioritization of the living conditions of the most vulnerable, the government’s message is a welcome one, but its actions must live up to that rhetoric. If it takes concerted and effective action on the issues identified below, it will be good not just for the vulnerable but for all of Spain. Taking seriously the elimination of poverty will facilitate labor mobility, generate more tax revenue to help address debt in the medium and long term, improve the efficiency of existing spending, and set a course for inclusive future growth.

Key challenges

If the new government is to deliver on its commitment to make Spain a leader in social rights within Europe, it will need to address the following main issues.

Social protection

Social assistance

Social assistance in Spain does a poor job of tackling poverty. The impact of social transfers on poverty reduction is the 6th lowest of reporting EU countries.¹⁸ In 2014, ten percent or less of transfers accrued to the bottom 20 percent of households, half of what they would have received had transfers been equally distributed among households.¹⁹ According to Caritas, the majority of the 1.8 million people living in severe poverty in Spain in 2018 did not use social protection mechanisms.²⁰ The share of poor adults living in a jobless household who received benefits was among the lowest in the EU in 2016, more than 15 points below the EU average.²¹

When support does reach people, the amount can be extremely low, as is the case for the national means-tested child benefit, which is just 341 euros per year for low-income families and 588 euros for the extremely poor.²² This is actually less generous than a child tax allowance available exclusively to high-middle and upper income families who have tax liabilities.²³ Similarly, for those who have not earned a full pension, the basic amount for a non-contributory pension is a mere 392 euros per month.

Spain gets what it pays for in social protection. Comparatively, it spends very little, and the results show it. In 2017, it spent 16.6 percent of GDP on social protection, well below the EU average of 18.8 percent.²⁴ Expenditure per head was 5,426.73 euros in 2017, compared to 7,651.89 euros in the EU in 2016, just over 40 percent more.²⁵ Spain spent significantly less than other EU countries including on disability (1.6 percent of GDP compared to a 2 percent average), family benefits (1.2 percent of GDP as compared to 2.3 percent), and housing and other social exclusion (0.3 percent of GDP as compared to 1.1 percent).²⁶

Bureaucratization of the social assistance system is a major cause of exclusion, and excessive document requirements serve as obstacles to support. I met a woman in Seville who had fled an abusive husband but could not access social housing because she did not yet have official divorce papers and another in Madrid who said her son had been told he needed to provide an official document that “proved” he was not engaged in informal work. In many municipalities, registration is the key to accessing social services, yet the requirements are completely unsuitable for people experiencing poverty, who may be homeless, in temporary housing, or unable to respond to highly specific document requests.

The decentralized structure of much of Spain’s non-contributory social assistance, in combination with the absence of any national standard for what minimum assistance must be offered, has led to great variation among autonomous communities. This is especially true for the last layer of the social safety net, which is specifically intended to prevent poverty and help low-income people without access to other benefits: autonomous communities’ minimum income schemes (renta mínima de inserción). While some of the schemes are clearly helping people avoid poverty, they are abject failures in certain autonomous communities. Support amounts are low, waiting periods can extend to many months, punitive residency requirements can bar access to new residents for as long as three years and exclude homeless people completely, programs are often incompatible with the types of short-term or part-time jobs that might be the only options available, people under 25 are generally ineligible, and the paperwork burden proves an insurmountable obstacle for many.²⁷

Madrid can be seen as a laboratory for the problems with minimum income schemes and illustrates why they can be so inadequate as a safety net. Madrid has the second highest GDP in Spain, a comparatively low unemployment rate, and a high cost of living. Although its severe poverty rate more than doubled in 10 years, from 3 percent in 2008 to 7.8 percent in 2017,²⁸ its minimum income scheme provides a miserly 400 euros a month, the lowest of any such scheme in Spain. To help me understand why it reaches only 1.5 percent of the population,²⁹ Madrilenos described to me how the program’s many requirements formally and de facto excluded them. One woman explained that she lost the benefit when she accepted a job on a probationary basis, but became homeless after she wasn’t hired permanently and her application to re-start the benefit was denied.

The way the program has been administered in recent years has made it only more irrelevant. The approval rate of initial applications fell drastically between 2016 and 2018, from 50 percent to 23 percent,³⁰ and the number of suspensions and terminations more than doubled.³¹ While Madrid government representatives agreed that the situation is unsatisfactory, one official insisted that the authorities are not to blame and that the fault belongs to applicants for not complying with the program’s requirements. Such appalling results suggest that the system is either intentionally structured to exclude people or extremely poorly designed.

A well-designed and adequately funded national minimum income scheme could go a long way to fixing what's broken, but it needs to avoid the shortcomings manifested in some of the autonomous community schemes. It should at least have the following characteristics: full portability regardless of autonomous community; compatibility with the existing labor market so that people do not lose access to support simply because they have accepted low-paid or temporary work; an amount adequate to ensure people are not living in poverty and that tracks the cost of living; an individualized and flexible approach to administration that facilitates access by minimizing burdensome paperwork requirements; availability to people under 25; and the absence of excessive conditions linked to job searching that could further bureaucratize the system and depress uptake.

If Spain’s high poverty rates are to be significantly reduced, there is no alternative to major additional spending to fix a broken social assistance system. Tax deductions are no substitute, as they necessarily only benefit wealthier people who pay income taxes. Nor can reliance be placed solely on employment. People in poverty very much want to work but they often can’t find decent work because of the high unemployment rate and the precariousness of the jobs that do exist.

Education

Education and poverty are closely linked. In Spain, 33.7 percent of those with a primary education or lower were at risk of poverty or social exclusion in 2018, compared with just 12.6 percent of those with higher education.³² Yet absolute public investment in education as a percentage of GDP has fallen significantly between 2009 and 2017.³³ There are real problems with the cost and quality of education, as well as segregation by socioeconomic and ethnic status.

Spain provides free education, but this does not cover the cost of transportation, food, books, and supplies. Those expenses, incurred by families, increased by 34 percent between 2009 and 2016.³⁴ According to a 2019 Save the Children report, 32 percent of families face difficulty paying education costs³⁵ and a European Commission report found that as of 2017, 25.7 percent of households with children at risk of poverty reported great difficulty in paying for the costs of formal education.³⁶ One mother told me, “Last year we couldn’t afford even a single textbook.”

Spain leads the EU in school dropouts, with a 17.9 percent rate of early leavers from education and training in 2018,³⁷ at an estimated cost of between 5.9 and 10.7 percent of the total GDP.³⁸ It has the second highest grade repetition rate in the EU,³⁹ with the most economically disadvantaged students six times more likely to repeat the year.⁴⁰ These troubling figures point not only to serious problems with the quality of the overall education system, but to a major drain on the overall economic well-being of the country.

An alarming 44 percent of students and 72 percent of children in vulnerable situations study in de-facto segregated schools that have a large concentration of children from poor socioeconomic backgrounds, Roma and migrant children, as well as those with higher support needs, accounting for 46.8 percent of total education centers.⁴¹ School segregation increases grade repetition, failure, and dropouts; decreases assessment scores; and adversely affects students´ expectations of pursuing university studies.⁴² I visited a school in Andalusia, with a 100 percent Roma student body, where 75 percent of students dropped out before completing secondary school and families receive remarkably little support, despite living in one of the poorest areas in the country. And in Extremadura, one official told me that it was an old problem rooted in “urban planning.” but offered no plan of action to address it. Concentrating children from the poorest backgrounds in the same schools is no recipe for educational success or overcoming poverty.⁴³

Healthcare

Spain is justifiably proud of its excellent healthcare system, with near universal health coverage. Yet important gaps remain for those who may need coverage the most.

A number of the worst off are not able to access healthcare. According to a 2019 EAPN study, around 5 percent of people in poor households who needed medical assistance, 25.5 percent of those who needed dental care and 3 percent of those who needed mental health services were unable to receive care for economic reasons. 6.9 percent were unable to access prescription drugs—8.3 percent among unemployed people. The National Health Survey indicates that between 9 and 10 percent of people at risk of poverty are not involved in preventative health practices.⁴⁴ And growing precarious employment means that taking a day off work due to illness is just not possible. “I can’t afford to get sick,” one person told me.

In 2018 Spain largely repealed Royal Decree-Law 16/2012, which had limited universal health coverage, including for migrants. Yet the current system leaves out some migrants in their first 90 days in Spain,⁴⁵ and REDER documented 4,755 cases of exclusion from the national health system since 2014.⁴⁶ The Ministry of Health acknowledged this gap, but apparently had no plan for addressing it.

I am also troubled by the increasing privatization of elements within the healthcare system, which risks prioritizing profits over service provision. The Ministry of Health maintained this was done only in exceptional circumstances, for reasons of efficiency and necessity, and that the quality of care was unaffected. However, they could not provide me with estimates of how much of the system had been privatized or studies that assessed the impact.

Autonomous communities

Autonomous communities bear significant responsibility for social protection, but austerity-related funding cuts significantly affected their ability to invest in these areas, had a negative impact on many people, and undermined the communities’ capacity to combat poverty. It’s scandalous that Extremadura, the autonomous community with the highest AROPE rate and the lowest median income, received less from the central government in 2018 than it did in 2008 (3,002 million euros in 2018 compared to 3,180 million euros in 2008). Similarly, Andalusia, Spain’s most populous autonomous community, with an AROPE rate well above average, experienced a drop in funding received from 19,099 million in 2008 to 18,983 million euros in 2018.⁴⁷ In 2018, total social spending by autonomous communities, including on healthcare, education, and social protection, was still 3.4 percent lower than before the crisis, despite the significantly increased demand resulting from the crisis and its after-effects.⁴⁸

Housing

Government officials consistently repeated the refrain that housing is one of the first steps in addressing poverty. But that makes it all the more shocking that so little has been done to secure the right to housing. According to the FOESSA foundation, 24 percent of the population faced “housing exclusion” in 2018 and 4.6 million people lived in inadequate housing.⁴⁹ The situation has gotten so bad that one organization I met with has resorted to holding more than 200 housing assemblies across the country every week to share information and collective advice about how to navigate the labyrinth of housing challenges.

Housing costs are rising at alarming rates. The affordability of the private rental market is amongst the lowest in the OECD, with more than 38 percent of private tenants paying market rates overburdened by the cost of rent.⁵⁰ The Bank of Spain found that the price of rental housing increased more than 50 percent from 2013 to 2019,⁵¹ while salaries have lost 7.8 percent of their purchasing power in the last decade.52 Spain has also come under fire for allowing private equity and investment firms to purchase low income and affordable housing and substantially raise rent, forcing tenants out of their homes.⁵³ I visited a housing block outside Madrid where people told me that their rents had been doubled overnight, as a result of a decision by the Madrid Government to sell large-scale social housing to Blackstone.

The rise in housing costs has been accompanied by shocking rates of evictions: The annual number of evictions rose from 16,097 in 2006 to 59,671 in 2018, with 712,723 total evictions between 2006 and Q3 2019.⁵⁴ This is an incomplete picture that does not account for the evictions of squatters or the total number of people affected.

Despite the clear need, low cost rental housing is almost nonexistent in Spain. Just 2.7 percent of the population was renting housing below the market rate as of 2018.⁵⁵ Housing Europe estimates social housing in Spain to comprise 2.5 percent of the national occupied housing stock, compared with 30 percent in the Netherlands, 24 percent in Austria, 17.6 percent in the UK and 16.8 percent in France.⁵⁶ New construction of public housing has plummeted: from 63,900 new units built in 2008 to 2,737 in 2018.⁵⁷ Meanwhile, the latest national housing census (2011), found 3.4 million vacant homes, while Housing Europe estimates there were 3.8 million vacant homes in 2017.⁵⁸

Statistics on homelessness are extremely limited, but there were an estimated 27,500-33,000 homeless people in 2015,⁵⁹ and FOESSA estimates that another two million people are at risk of homelessness.⁶⁰ But the policy response is confused. For example, in Extremadura, one official told me that they “don’t have homelessness.” Preventative policies are “practically non-existent,”⁶¹ and I spoke with people affected by homelessness who stressed the serious difficulty of accessing social services without a permanent address, preventing those in the most precarious situations from getting the support to which they are entitled. Among homeless people, 19.8 percent did not have a healthcare card as of 2015, including 32.7 percent of foreign nationals.⁶² Autonomous communities should urgently rectify this situation, implement a housing first approach, and pursue preventative strategies that emphasize intervention and support before people are thrown out on the street.

Furthermore, almost 10 percent of Spain’s population could not afford to keep their dwelling at an adequate temperature in 2018, and people are having to choose between heating their homes and feeding their children. Spain should expand access to the social bonus that subsidizes utility payments for those who need it, and ensure that utilities are not cut off to vulnerable families. Catalonia’s law on energy poverty, the outcome of sustained housing advocacy, is a step in the right direction.

After so many people in key cities in Spain emphasized the gravity of the housing crisis, my discussions with key officials in the national government left me concerned that there is a deep mismatch between the needs and the policy responses being considered. No one doubts that urgent measures are required. A 2018-21 National Housing Plan includes an allocation of 20,000 public housing units over four years,⁶³ but that is a far cry from what is needed. New laws that increase the minimum length of rental contracts and discharge housing debt in the event of foreclosure and repossession are a step in the right direction, though the latter should be applied retroactively. Spain should move aggressively to substantially increase the availability of low cost housing, but that will bring little relief for a number of years. Similarly, the proposed significant reliance on Public Private Partnerships is, based on much past experience, likely to benefit the middle classes but not those most dramatically affected. While rent controls have been embraced in Barcelona, they remain controversial at the national level and were given short shrift by the officials to whom I spoke. This seems to me to be a mistake. The experience in Paris, Berlin, and an increasing number of cities in the United States indicates that rent stabilization schemes can work well, provided they are carefully designed to avoid the clumsiness and inflexibility of schemes devised decades ago in very different circumstances.⁶⁴

The Government should also give substance to the right to housing. Despite its constitutional recognition and protestations to the contrary, all the information made available to me suggests that it is currently an empty and largely meaningless shell. While it cannot be made justiciable without a constitutional amendment, there are many ways in which administrative steps could be taken to make it a meaningful concept in shaping housing law and policy.

Tax policy

If Spain is serious about fighting poverty and making much-needed investments in social assistance, education and housing policies, it also needs to change its tax policies. The revenue currently raised is too little to fulfill social rights and achieve a balanced budget, the system is inadequately progressive, and tax fraud, evasion and avoidance potentially cost the country billions each year.

Spain’s tax revenue is relatively low. The tax-to-GDP ratio was 35.4 percent in 2018, much lower than the EU average of 40.3 percent and Eurozone average of 41.7, and especially low compared to peer countries like Italy (42.1 percent) and France (48.5).⁶⁵

Corporate tax rates have been cut since 2007, from 35 to 25 percent,⁶⁶ and firms also take advantage of generous deductions and subsidies, so that they actually end up paying far less than the nominal rate. The Ministry of the Treasury was not able to provide me with a figure for the actual effective rate that corporations are paying, on the basis that the figures are “protected.” This position is untenable given the obvious public interests involved, and even more so in light of the new government’s pledge to bring the effective rate up to a minimum of 15 percent. Corporate tax revenue has declined massively in recent years. Between 2007 and 2018, corporate taxes fell as a percent of total revenue from 22.34 to 11.9 percent, and from 44,823 million euros to 24,838 million euros.⁶⁷ While some of these losses have been offset by an increasing reliance on the Value Added Tax (VAT), between 2007 and 2017 total tax revenue actually declined by about 6,725 million euros.⁶⁸

In addition to not raising the revenue necessary to fund the fulfillment of social rights, the tax system is inadequately progressive and barely begins to harness the capacity of taxes to address inequality. Inequality skyrocketed after the crisis. Between 2007 and 2015, the Gini index rose by 2.1 points, the S80/20 by 0.9 and the Palma ratio by 1.4.⁶⁹ Yet the redistributive effect of household direct taxation is much lower than the EU average, reducing the S80/S20 ratio by 8.6 percent in 2016, compared to 12.4 percent in the EU.⁷⁰ Indirect taxes actually increased inequality by 3.5 percent.⁷¹ Spain is increasingly reliant on the VAT—with a rate increase from 16 to 21 percent between 2009 and 2013, raising the percentage of total revenue from 27.83 to 33.63 percent.⁷² This is problematic, as the tax is generally regressive, and Spain’s even more so because of a number of deductions that benefit wealthier people, such as on hotels. There are also autonomous communities in Spain where inheritance tax is extremely low, and children and spouses can inherit as much as one million euros tax free.⁷³

Tax fraud is a major issue in Spain that deprives the state of resources. A recent IMF study estimated that the size of the shadow economy in Spain is 20.3 percent of GDP, even higher than in 2007. The shadow economy is estimated to reduce tax revenue by as much as 70 billion euros.⁷⁴ And in 2018, companies on the IBEX 35 had 805 subsidiaries in tax havens, suggesting that significant amounts of revenue may be lost to tax avoidance.⁷⁵

Climate change

Climate change will have a dramatic impact on the lives of people in poverty and the policies in place to support them.⁷⁶ In addition to the mitigation and adaption efforts already in place, Spain must ensure that its social protection policies take into account the impending effects of climate change, and that it is positioned to support people in poverty who will bear the greatest brunt of the harm, as well as those who will be pushed into poverty by climate change. Heat waves have already led to the deaths of hundreds of people, and poor families without access to electricity or air conditioning will be increasingly at risk.⁷⁷

The government in 2019 announced a 47 billion euro public investment plan to tackle climate change over 10 years, with the goal of making Spain carbon neutral by 2050.⁷⁸ It declared a climate emergency last month⁷⁹ and has significantly reduced its dependence on coal.⁸⁰ But a long awaited law on climate change has yet to be passed, and Congress should act without delay.⁸¹

It is encouraging that the Government already has an agreement with the ILO on implementing a Just Transition,⁸² and it will be crucial that the new government works to ensure that workers displaced during the transition away from fossil fuels have adequate social support and access to training programs. The inadequacy of the current overall social protection system indicates that this will be a major challenge.

Administrative transparency and accountability

Many of my interlocutors commented on a lack of transparency in relation to government decision-making and the difficulty of making sense of, let alone using, much of the published information provided by official sources. As one highly informed official told me, “Information is not lacking. It’s just that it’s impossible to figure out what the underlying strategy is, or how to assess the results or impact of the policy.” The government should seek to make information more user friendly, more available, and more related to indicators of effectiveness.

Bureaucratic procedures, including an urge to collect documentation seemingly for the sake of it, and a culture of endless verification, have wreaked havoc in many areas of social protection. Many of the requirements and underlying assumptions seem more appropriate to the nineteenth than the twenty-first century. But it is notoriously hard to change the way in which entrenched bureaucracies operate. Given the costs and inefficiencies on the government side, and the pain and inconvenience on the side of citizens and others, as well as the imperative need to adapt to the digital era, the government should initiate a far-reaching inquiry designed to reduce unnecessary red tape and transform bureaucratic practices in the field of social protection. Such a review could be undertaken by an expert group appointed for the purpose, or by the Independent Authority for Fiscal Responsibility (AIReF). The goals should include reducing bureaucratic hurdles, streamlining application processes, digitizing data with due regard for the human rights, facilitating municipal registration, and ensuring that people are aware of the benefits to which they are entitled.

In addition AIReF should be empowered to carry out audits and research on its own initiative, without an external request from a public authority.

Vulnerable groups

Becoming a leader in social rights also requires attention to the disproportionate impacts of poverty on select groups of people in Spain. The following groups are among those that need particular attention and support:

Women

In Spain, as in many countries, women have higher rates of relative poverty, severe material deprivation, low intensity of employment, and severe poverty, and are worse off in nearly all variables related to the labor market.⁸³

Royal Decree-Law 6/2019 introduced measures to ensure equal treatment and opportunities between women and men in employment, but there is much work still to be done.⁸⁴ Spain has the second highest rate of female unemployment in the EU by a significant margin.⁸⁵ And unpaid care work takes a toll on women’s incomes: 47 percent of women who work part-time do so for reasons of childcare, compared to 7 percent of men. And 23 percent of women with children are unemployed, a full 10 percentage points higher than among men.⁸⁶

Gender based violence is also a cause of poverty. I met multiple women who explained the economic hardship they faced after leaving abusive relationships, including one woman who was unable to access social assistance because she had fled to another autonomous community and had not yet met the one-year residency threshold. According to one 2019 report, 61.2 percent of surveyed women who were victims of gender-based violence were unemployed, and an additional 6.9 percent worked in uncontracted positions.⁸⁷

The extremely low child benefit and low spending on social assistance for families and children is especially harmful for women. Eighty-two percent of single-parent households are headed by a woman, and a full half of single parent households were at risk of poverty or social exclusion in 2018, up from 45 percent in 2008.⁸⁸ 53.5 percent couldn’t handle an unforeseen expense, and 17.4 had fallen behind on paying the cost of housing or utilities as of 2018.⁸⁹ Extending the length of early childhood education to children between 0 and 3 years and developing affordable after-school services for school-age children can help parents, and especially mothers, maintain employment. The share of school-age children covered by after school services stands at 8 percent, well below the OECD average of 29 percent.⁹⁰

While government officials explained a range of policies designed to promote gender equality, there was a notable absence of attention to the deep economic structures that perpetuate inequality. Greater attention should be given to the economics of unpaid care work and ways to compensate and replace it. In my meeting with the Equality Ministry, I was given the impression that the Ministry employs no professional economists and does not see this as a problem, which is highly unfortunate given that the fight to achieve gender equality surely must be fought in part in the domain of economics.

Children and youth

29.5 percent of children were at risk of poverty or social exclusion in 2018, and 6.5 percent experienced severe material deprivation.⁹¹ Child poverty rates are even more intense in rural areas; among immigrant, refugee, and Roma populations; and in families with people with disabilities.⁹² Households with children or adolescents have a higher risk of poverty or social exclusion than those with adults only,⁹³ and a full 29 percent of households with children described “great difficulties” in making ends meet.⁹⁴ Surprisingly, officials from various autonomous communities assured me that the best way to deal with child poverty was by addressing household poverty, thus problematically discounting the unique characteristics and lifelong impact of childhood poverty.

Public spending on family benefits is poorly targeted and remains among the lowest in the EU, with limited impact. As of 2017, spending was around half the EU average, 1.2 percent of GDP compared to 2.3 percent.⁹⁵ The effectiveness of measures is also low, and Spain’s social protection only achieves a reduction of 6.9 points in the rate of child poverty, compared to, for example, 32 points in Ireland.⁹⁶ Spain is almost unique among EU countries in that it does not have a universal, non-contributory child and family benefit scheme.⁹⁷ In 2019, Royal Decree-Law 8/2019 increased the family benefit for dependent children to 341 euros per year for children at risk of poverty (1.3 million children), and up to 588 euros for families in a situation of severe poverty (630,000 children). Yet almost half of children in poverty, one million children, do not have access to the benefit, which is still very low at roughly 28 euros per child per month.⁹⁸

The situation for youth in Spain is also challenging, with low rates of employment and school dropouts. There was a 30.51 percent unemployment rate among those below the age of 25 as of Q4 2019⁹⁹ and more than 70 percent of young workers in Spain were on temporary employment contracts, significantly higher than the EU average.¹⁰⁰ As of 2018, 12.4 percent of youth aged 15-24¹⁰¹ and 19.6 percent of those aged 20-34 were not employed or in education or training (NEET).¹⁰²

Overall, Spain’s failure to have a more concerted and generous set of policies in place to eliminate pervasive child poverty is both a moral failure and a self-inflicted economic wound.¹⁰³ Poorly educated and cared for children mean a less sophisticated workforce, and become a further drag on social protection services in the years ahead.

Roma

Spain has one of the largest Roma communities in the EU, approximately 750,000 people, or 1.6 percent of the population.¹⁰⁴ But official employment and social indicators do not disaggregate the statistics, thus contributing to making the situation of Roma people invisible. The Ministry of Education told me that they were not permitted to collect data on Roma children. But according to surveys by Fundación Secretariado Gitano, relied on by government officials with whom I met, Roma people face staggeringly high rates of poverty and associated indicators in Spain.

More than 80 percent of the Roma population face poverty or social exclusion and 46 percent are extremely poor with a monthly income below 310 euros. The child poverty rate stands at 89 percent and unemployment at 52 percent. Roma women suffer a clear disadvantage in all areas, with an employment rate that only reaches 16 percent. And Roma children attend segregated schools at high rates, with only 17 percent of the population over 16 completing secondary education or higher.¹⁰⁵

I visited two Roma communities, in Polígono Sur in Andalusia and Cañada Real just outside Madrid. Although these are extreme examples, not representative of the conditions of most Roma in Spain, I was nevertheless shocked at the extent to which the relevant governments appear to have abandoned the people living there. Those with whom I spoke were engaged in a losing battle to secure basic forms of government support or services. In Cañada Real, I met people living without a clinic, employment center, school, or even legal electricity, on an unpaved road, directly adjacent to incinerators, in an area deemed hazardous to human health. Despite a 2018 agreement to relocate people from the area, the government has so far done so for only 34 families, and the government of Madrid could not provide me with any definitive date by which the rest would be safely relocated. Arrangements for meaningful consultation also appeared to be lacking, despite the existence of various formal structures for that purpose.

Government officials agreed that the situation for many Roma people is dire, but I was struck by the lack of urgency and the resignation with which they accepted that entire parts of the population have been relegated to third class status without access to the rights to which they are entitled. After years of plans and benchmarks that have left Roma poverty indicators at deplorable levels, there is a real need for a crisis-level response. Some officials with whom I spoke seemed only concerned to have ticked certain action boxes, rather than achieving any tangible results.

Migrants

There are approximately 6 million migrants in Spain.¹⁰⁶ Those from outside the EU have the highest risk of poverty and social exclusion (56 percent) followed by EU citizens (47.7 percent), both significantly higher than the Spanish population (23.1 percent).¹⁰⁷ For children with at least one migrant parent, the risk of poverty or social exclusion jumps to 49.6 percent, the highest in the EU.¹⁰⁸

Civil society organizations described a resettlement system that leaves migrants unable to work or afford housing. Refugees and migrants often face serious obstacles to decent housing because of the shortage of supply, requirements for access, and discrimination in allocation, often ending up in precarious or overcrowded situations.¹⁰⁹

Civil society organizations described highly distressing situations for migrant women and girls, especially those working in agriculture, including situations of high vulnerability, sexual and commercial exploitation, institutional violence, and a lack of protection at the most basic levels. According to Women’s Link Worldwide, female agricultural workers are often deceived as to the terms of their employment: with promised 6.5 hour work days extending to 10 hours; fixed-term contracts changed from three months to a discretionary termination of employment; and promised salaries of 39-40 euros per day decreasing significantly, with lapses of payment.¹¹⁰

I’m extremely concerned about the situation of unaccompanied children, a vulnerable population that has been demonized in the current political debate. Spain continues to use debunked, unreliable age assessment techniques to determine the age of unaccompanied minors, including invasive and humiliating genital examinations, despite censure from the UN Committee on the Rights of the Child.¹¹¹ The rejection of minor status can leave the individual without access to support or shelters for either children or adults, creating a gap that can push children into poverty, and lead to trafficking, sex work, sexual abuse, drug dependence, or even disappearance.¹¹²

In Huelva, I met with workers living in a migrant settlement in conditions that rival the worst I have seen anywhere in the world. They are kilometers away from water, and live without electricity or adequate sanitation. Many have lived there for years and can afford to pay rent, but said no one will accept them as tenants. They are earning as little as 30 euros per day, and have almost no access to any form of government support. One person told me, “When there’s work, Spain needs migrants, but no one is interested in our living conditions.” According to civil society, 2,300-2,500 people live in similar conditions during the strawberry season. In 2018-19 the strawberry crop in Huelva was worth 533 million euros¹¹³ and the largest producer is Driscoll’s and its associated companies. Driscoll’s has a set of labor standards that “apply to all workers in our supply chain, with no distinction.” Given that the conditions I observed in Huelva are simply inhuman, and given the dominance of this multinational corporation in the local and global strawberry industry, I plan to ask them what they are doing to monitor and improve the labor conditions in this area.

Rural poverty

Just under one fifth of Spain lives in rural areas,¹¹⁴ where the real average income per capita fell 13.5 percent between 2009 and 2018.¹¹⁵ Rural areas are experiencing depopulation and acute ageing. Fourteen provinces are heavily affected by “demographic decline,” with more than 25 percent of their population aged 65 or older.¹¹⁶ Individuals experiencing poverty in “empty Spain” (la españa vaciada) face unique challenges and a very high risk of poverty or social exclusion (31 percent).¹¹⁷

The people I met with in rural areas stressed the benefits of rural living, including proximity to nature, but also described isolation, exclusion and poverty. A group in Extremadura explained that they experienced dayslong power cuts, were at times unable to visit a doctor because of a lack of public transportation or money to pay for a taxi, and felt that their votes didn’t matter to the central government. I visited an area in Galicia with no specialist healthcare, no daycare, and no secondary education where a woman explained, “My daughter says she doesn’t see a future for herself here.” People also described high prices for internet, posing risks of digital exclusion for low income and poor families, especially as the government moves to digitize aspects of social support.

The Government should not leave this large group to suffer from market forces completely beyond their own control, and should draw up a comprehensive strategy to deal with the problems that affect large and growing numbers of people.

People with disabilities

People with disabilities suffer many sorts of structural discrimination and disadvantage in Spain, including in relation to employment, income, education, and housing. Roughly a third of people with disabilities in Spain, 31.1 percent, were at risk of poverty or social exclusion in 2018, compared to 24.1 percent of those without disabilities.¹¹⁸ And the employment rate was just 25.8 percent for people with disabilities, well under half of that for those without a disability (65.9 percent).¹¹⁹

A lack of accessible housing makes things even worse. Only 0.6 percent of the 9.8 million residential buildings in Spain meet the criteria of universal accessibility for people with reduced mobility or disabilities.¹²⁰ A woman in Badajoz explained to me that after her husband developed a disability, she had to set up a makeshift toilet in her living room because the bathroom in her public housing unit was not accessible. According to one 2019 survey 1.8 million people with reduced mobility required assistance to leave their home, and 100,000 never left.¹²¹ And 16.5 percent of children with disabilities are receiving segregated education in Spain, outside the mainstream education system.¹²²

I visited a center for people with disabilities in Galicia that is doing wonderful work to support independent living and employment training, but the troubling reality is that a very small number of those who need it are getting access to that kind of support. I heard powerful testimony from people in all of the autonomous communities I visited about the discrimination they face in the job market and in society, and the battles they must go through in order to enforce their rights. The Government should accord a higher priority to eliminating these many forms of discrimination.

Domestic and care workers

Estimates of the number of domestic workers in Spain range from an official figure of 453,000 domestic employees¹²³ to a civil society estimate of 700,000 people working as household or care workers. Women account for 97.9 percent of them,¹²⁴ and they are marginalized by Spanish law, which places such work in a “special regime” with fewer rights.¹²⁵

Civil society reported that one in three domestic workers in Spain lives in poverty, and many are working in the informal economy for employers who aren’t making social security payments. They very often work double their contracted eight hours per day, earn just 800 euros per month, yet typically have to rent a room to stay for their weekly night off, and the cost of food is deducted from their salary. Undocumented workers are especially vulnerable to exploitation, and I heard reports of employers confiscating domestic workers passports.

I met with a group of workers in Madrid, at the Servicio Doméstico Activo (SEDOAC), a center I understand is the first of its kind in Europe, which plays an extremely important role in promoting the rights and well-being of domestic workers. I heard deeply troubling accounts of working conditions, women working inside for years in what felt like a “jail,” facing sexual harassment, constant uncompensated overtime, and a lack of access to social security or pensions. “I’m about to turn 72 and I continue to struggle,” one woman said. I was told that the center´s existence is now under threat because the government of Madrid has withdrawn funding. Given the extent of the need, it would be a tragedy if it were forced to close.

The new coalition government has pledged to ratify International Labor Organization Convention 189 on domestic workers. Full implementation of the terms of the Convention would mark a major step forward in Spain.