The situation of precariousness and inequality that emerges from the latest social statistics is reaching levels that are difficult to assume, and the pandemic has contributed to its aggravation. Given the manifest ineffectiveness of the benefits that should provide a solution to this situation, the implementation of a Basic Income is becoming increasingly necessary and essential.
By Jordi Arcarons
Last July, the “Instituto Nacional de Estadística” (INE) published the latest edition of the “Living Conditions Survey” (ECV). The information on the opinion of the households surveyed was obtained during the fourth quarter of 2020 in the midst of the pandemic, so the interviews were conducted by telephone rather than in person and led to a decrease in the sample size for households of approximately 15%, compared to previous years. However, the INE considers the information collected to be fully representative. With regard to the income variables collected by this statistical operation, as these always reflect the situation of the previous year (2019), it must be said that their values have not been altered by the effects of the pandemic.
The results show that the statistical indicators of living conditions in the Kingdom of Spain are certainly worrying. The risk of poverty affected 21.0% of the population, an increase of 3 tenths of a percentage point over the previous year, while the average for the decade (2010-2019) was 21.3%. Severe material deprivation reached 7%; 2.3 points above the previous year and with an average for the period 2011-2020 of 5.8%. In the definitions of these two concepts, I already referred to in the final part of a previous article, we can now add another indicator which is low employment intensity, i.e. people of working age, excluding those aged 60 and over, who worked at less than 20% of their working potential. This indicator reached 9.9%, a decrease of 0.8 points from the previous year (thus an improvement) and an average for the decade 2010-2019 of 13.5%.
The AROPE rate, which was created in 2010 (slightly modified in 2021 to take on board the EU-2030 target) in order to measure relative poverty in Europe, is an indicator that synthesises the three previous ones, given that it is calculated with the population at risk of poverty, or in material deprivation or low employment intensity. This rate exceeded 26.4%, increasing by more than one point with respect to the previous year and with an average for the decade (2010 to 2019) of 27.1%.
When calculated by age bracket, the AROPE rate for those under 16 was 31.2% (1.1 points higher than the previous year); between 16 and 64 it stood at 27% (0.1 points higher) and for those over 64 it was 20.5% (4.8 points higher). In relation to the education of those aged 16 and over, the differences are very significant, as the rate fell to 13.7% in the case of tertiary education, while it reached 36% for those with primary education or less. And, finally, looking at the nationality of people over 16, the differences are overwhelming, since for those born in the Kingdom of Spain it was 22.6%, while for foreigners from the EU it was 43.4% and for foreigners from the Rest of the World it was 58.0%;
All of the above figures are food for thought, given that beyond the values for the year of analysis of the LCS, which are in themselves quite worrying, they show a situation over the last ten/eleven years in which precariousness has become structurally established in this society.
Some additional figures from the LCS which reveal this degree of precariousness are: a) that 10% of households make ends meet with great difficulty (2.2 points higher than in the previous year), b) that 35.4% of households cannot meet unforeseen expenses (1.5 points higher) and that 34.4% cannot go on holiday for one week a year (1 point higher).
The international comparison of the AROPE rate, bearing in mind that EUROSTAT has only published final data until 2019, is not very encouraging. The Kingdom of Spain ranked 25th out of 36 states analysed, with Italy, Lithuania, Latvia, Greece, Montenegro, Romania, Serbia, Bulgaria, Turkey, Macedonia and Albania in the worst situation, in this order. During the period 2011-2019, using the same comparison group, the 25th position was the most repeated and in all these years it was always clearly below the bottom half of these 36 countries.
Regarding income inequality data, the LCS indicates that the Gini index (the value moves between zero and one hundred, indicating 0 total equality and 100 maximum inequality) was 32.1 with the 2019 income data, a value that experienced a decrease of 0.8 points compared to the previous year, thus an improvement. The international comparison provided by EUROSTAT, again limited to final data up to 2019 and for the same 36 states, is more illustrative and less optimistic. It indicates that the Kingdom of Spain occupied the 27th position, with the following countries in the worst situation: the United Kingdom, Serbia, Montenegro, Albania, Romania, Latvia, Lithuania, Bulgaria and Turkey. For a more structural view, during the years 2011-2019 only in two years it managed to improve a position, but in five others it worsened it.
Another indicator of inequality but also of income concentration is the so-called S80/S20, which compares cumulative income at the 80th percentile with cumulative income at the 20th percentile. The LCS says that with the 2019 income data this ratio was 5.8 having experienced a decrease of one tenth compared to the previous year, therefore also an improvement. But if we go back to using the EUROSTAT comparison, with the same conditions as above for the Gini index, the only difference is the replacement of the United Kingdom by Italy in the list of worst-off countries, the rest of the conclusions are identical and, consequently, equally pessimistic.
What does the system of social benefits designed by the administrations have in place to deal with the situation of precariousness and inequality described so far? In Catalonia, two conditional benefits: the Guaranteed Citizenship Income (Renta Garantizada de Ciutadania, RGC) and the Minimum Vital Income (IMV). The first was launched in September 2017, so there is therefore four years of experience in its operation and information that should allow us to analyse whether the objectives that marked its implementation have been achieved. The second, which was launched in May 2020, in the midst of the pandemic, is much more recent and has less experience, but above all information that does not yet allow for a detailed analysis of its operation.
As for the GGR, the Catalan Institute for the Evaluation of Public Policies (IVALUA) presented an extensive report at the end of May this year analysing its design and implementation. Some of the information that emerges from it is quite illustrative of what has been achieved so far by the GCR, whose objectives are: “to guarantee the minimum requirements for a dignified life, to promote the autonomy and active participation of people in society and their empowerment, to overcome the conditions that have led them to need this or other similar benefits and to rationalise and simplify the existing benefits”.
Balance with information corresponding to 2019. Firstly, in Catalonia there were around 225,000 households at risk of severe poverty (as a reference for guidance, three examples: households receiving 7,116.1 euros net per year in the case of a single family, or 9,250.9 euros net per year in the case of a single parent with one child under 14, or 14,943.8 euros net per year in the case of two adults with two children under 14), this is the group that should be the main beneficiary, as it is the primary objective that the GCR aims to eradicate. On the other hand, the number of households eligible to apply for the GCR was less than 105,000. And finally, two years after its entry into force, approximately 85,000 households were beneficiaries.
There are four notable findings: 1) almost 54% of households in severe poverty could not even claim the GCR and if they had, they would have been refused; 2) 20% of households that could claim the GCR did not; 3) the GCR did not even reach 38% of households for whom it was designed; and 4) the proportion of households in severe poverty among households eligible for the GCR was 82.8%. The first three conclusions are worrying because they indicate that, for reasons of incompatibility and misinformation, the GCR is not reaching the majority of people for whom it was designed. The fourth is the only one in favour of its design.
Balance since its entry into force and until May 2020. Firstly, there have been 130,488 applications, 53.7% for GCR and 46.3% for state pension supplements; of this total, 24.7% have been approved, 57.2% rejected, 6.7% withdrawn and 11.4% are pending resolution. On the other hand, there were 9,838 suspensions, the main reason for which was employment-related (75.6% of the total); the other relevant reasons for suspension were administrative (19%). And finally, there have been 11,589 definitive terminations; the main reasons for termination are loss of income or assets requirement (28.9%), labour integration of a GCR recipient (12.4%) and changes in residence status (8.5%).
A good reason for reflection is the high percentage of refusals, especially considering that the applicant group is immersed in severe poverty.
Two last issues of note in the report. The first relates to incompatibilities: if it were not compatible with part-time work, the number of households that could apply for the GCR would increase by 17.8%; but if it were also compatible with full-time work, the increase in households that could apply would be 141.7%. The second relates to management: integrating, improving and extending the information available in the administrative registers of the GCR would make it possible to better detect what resources and services need to be mobilised in order to redirect the situation of households and persons benefiting from the GCR.
As for the MVI, we have already pointed out that there is as yet no study or report that would allow us to take stock of its one and a half years of existence. A look at the “Inclusion, Social Security and Migration” section of the “Presidency of the Government” website gives a description of results that can be summarised as follows: 1.24 million applications have been processed, 94% of the valid applications received, of which 337,000 (27.0%) have been approved, 888,000 (71.6%) rejected and 18,000 (1.4%) are awaiting further information. More than 60% of the rejected applications were rejected because they exceeded the income and wealth thresholds established in the regulations. Approved applications represent approximately 800,000 beneficiaries, 61.9% are adults and 38.1% are minors.
Bearing in mind that the processing process coincides with the pandemic, it is another good reason to reflect, as in the case of the RGC, on the high percentage of refusals, all the more so given that severe poverty in the Kingdom of Spain affects around 1.6 million households and approximately 3.2 million people.
All this brings us to the question with which I have titled this article. Basic Income is necessary because the situation of precariousness and inequality described in the first part is alarming. But also because none of the measures designed so far by the administrations, as I have tried to show in the last part, are capable of remedying it. Conditionality, the main reason for the ineffectiveness of both the GCR and the MVI, is an insurmountable stumbling block, which the Basic Income does not have to face.
