There are three moments in people’s lives. From the point of view of the intergenerational economy, there is a stage in which people earn enough income to cover all their spending needs and, even more, to pay taxes and contributions with which to finance the needs of the welfare state. It is a moment that in Spain, in aggregate form, could be placed between 27 and 59 years old of age (with data for 2010). That is where the report ‘Equity between generations as a guarantee of social well-being’, published within the dossier ‘Welfare State, vital cycle and demography’ of the La Caixa Foundation and coordinated by the professor Conception Patxotfrom the University of Barcelona.
There are two other vital moments in which the opposite happens: the childhood and youth and the old age. From zero to 27 years of age, people in Spain, in general, do not generate the necessary income to cover the private or public expenditure they consume (from food, clothing and accommodation, to education and health). The estimated age of 27 years corresponds to 2010. It is a couple of years later than the estimate for the 80s and 90s of the last century. “The growing access to university studies has delayed the incorporation into the labor market & rdquor; Patxot explains. In 2012, at the height of the recession, this reference age reached 30 years.
A similar situation, life cycle deficitis identified from the age of 59: the consumption needs of the elderly are mostly financed thanks to public pensions and, where appropriate, with the contributions of the families themselves.
The spending life cycle
Two deficit stages of the life cycle and, in between, like in a sandwich, a period of surplus. The sandwich is repeated in all developed societies, as reflected in the research project ‘Aging in Europe. National Transfer Accounts in Europe’ (AGENTfor its acronym in English), which includes the report signed by Patxot and the academics Gemma Abio, Elisenda Renteria, Meritxell Solé Y Guadalupe Souto. The difference between one and the other societies resides in the more or less long duration of the central moment and in how the other two stages are financed.
In Spain, the public money transfers in favor of older peoplepensions, above all) is not only 33 times higher than the spending allocated to families and young people (9.8% of GDP in the first case compared to 0.3% in the second, according to Eurostat data). In addition, the weight of old-age benefits with respect to GDP has increased by three points in Spain since 2008, while that of family benefits has remained unchanged.
“A redistribution of which very little is said”
“The cost of children continues to be mostly private. But these children, who above all support the families that decide to have them, are the ones who in adulthood will end up paying with their taxes and contributions for the welfare state of all: those who decided to have children and those who did not”, explains Patxot . From his point of view this translates into a transfer from families with children to people without children, that they saved the expenses of the upbringing and that perhaps they could achieve a better professional promotion. “It is a redistribution of which very little is said. A redistribution that we do not worry about & rdquor ;, warns the professor.
Solution? “There has to be a welfare system that finances both the childhood and youth stage, as well as the old age and that the first stage is not financed mainly with family resources& rdquor ;, answers Patxot.
Would that imply taking public money from retirement pensions to finance public policies for children and young people? “To some extent yes. But there must also be other types of measures that imply a greater contribution to the welfare state of those who have not had children & rdquor;
Should people who do not have children contribute more? “That is one of the proposals put forward by some economists, such as the German Hans Werner Sinn. It may be unpopular, but you have to think about a well-being policy throughout life& rdquor;, proposes the professor at the University of Barcelona.
unpopular and difficult
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The reflection is not new. Already at the origins of pension distribution system, in Germany (1957), critics saw in the model a system that rewarded not having children. To this the then chancellor responded Conrad Adenauer approved with his well-known statement “people always have children”, as Professor Janier Mimentza Martín recalls in her study on ‘Basic Income and Constitution in the German Social State’.
But the truth is that families now have far fewer children than then. Taxing people without children more would be a very difficult policy option to implement. What would happen to a person who, after having contributed a plus for years, later decided to have or adopt a child? At least for now, the latest Spanish governments (of Mariano Rajoy and Pedro Sánchez) have chosen to reward people with children with a supplementary pension that by 2023 amounts to 29.30 euros per month for each of them and compute as the quoted period the child care leave. The debate focuses, above all, on how to promote birth policies and the one that refers to a higher contribution of people without children, at least for the moment, is only theoretical.