The middle class languishes in Spain due to the lack of relief from the ‘millennials’

Enrique He is a professor of Cytology in a higher degree cycle for laboratory technicians. Have a temporary and part-time contract which he renews year after year and which he combines with the study of a second career. “When you start you have to assume that you are going to get temporary contracts. If you are lucky it will last an entire course, if not a few months,” he resigns himself. At 28, he shares a flat and does not even consider getting into a mortgage. “Are you kidding me?” he replies at that prospect. At his age, his father, a telecommunications engineer, already had his first daughter and paid for the flat in the Les Corts neighborhood of Barcelona. Enrique’s father, now retired, embodies the prototype of middle class that his son, for the time being, has not been able to maintain.

sandra He is the same age as Henry. She is autonomous and works as a graphic designer for different clients, from small companies to some public administrations, such as city councils or the Barcelona Provincial Council. He also shares a flat, because with his income of just over a thousand euros a month – “on average, some months go better and others not so much,” he points out – maintaining a rental in the Catalan capital it is an exercise in financial contortionism that he declines to attempt. Her parents -today owners of a small courier company- also had her at the age of 28, in a flat paid tocateja in the district of Sant Martí. “On top of that, now they want to raise my self-employment fee. I’m pissed off… It’s not that I don’t want to contribute more, but how am I going to do it if they don’t pay me more?” Sandra complains.

If the middle class has historically been defined by a home ownership and a stable job with sufficient and stable income to get to the end of the month without frights, neither Sandra nor Enrique meet either of the two requirements. And it is that this kind of workers with decent working conditions and income is languishing in Spain, unlike other European countries, thinned out year after year due to the lack of generational relief. “The generations that have been incorporated in the last two decades into the working market they have had fewer opportunities, due to a general stagnation of productivity and the structural loss of quality in employment. In other countries, these younger generations have had better opportunities to access middle income”, concludes a report published this week by the Social Observatory of the La Caixa Foundation.

What are the effects of this progressive loss of the middle class? “The social glue is lost and in the long term society becomes polarized, something that we have already seen historically in Latin America. Without a middle class, the State loses its capacity to finance the great cohesion policies, such as health, education or pensions. What ends up causing a segregation between public services of increasingly lower quality, due to that lack of resources, and private services that are accessed by the upper classes, who try to stop contributing to these public services because they already pay for their private services. . Is a clockmaking bomb“, Explain Olga sang, one of the authors of the study and Professor of Economics at the Alcalá de Henares University. “We are witnessing a true fiscal desertion of the hyper-rich, both in Spain and in the world,” warned the second vice president, Yolanda Diaz, last Friday in an act with the French economist Thomas Pickett.

‘Millenials’, with two crises in tow

The report, also prepared by the professor of Economics at the UNED Luis Ayala, confirms that the population group with average incomes is shrinking. Their weight today is lower than it was 30 years ago, and lower than that of the middle class in the higher-income European countries. And this accentuates the polarization between rich and poor, especially since the previous financial crisis and the later great recession. “Spain, without being where the average income of the population fell the most, was the EU country where the income of the poorest 10% fell the most compared to the richest 10%”, the researchers point out. And it is that the ‘millennials’ are not having it easy to plan and consolidate their vital trajectories and in little more than a decade they have dragged two crises of extraordinary depth – that of 2008 and that of covid – on their backs.

Two of the foci of this inequality are the capital income, which are more concentrated in some hands than in others, but the other is found in the world of work. And it is that more and more there is a layer of workers who earn a lot and another that earns very little. According to the study, the richest 20% of the population receives more than 43% of the earned income on behalf of others. “The greater weight of these incomes in total income makes them the ones that contribute the most to inequality,” says the study.

A challenge for labor reform

There are not only ‘first class’ and ‘second class’ workers in terms of salary, but also in terms of their ability to maintain that salary. And it is that the chronic labor duality, between some indefinite workers who during the crisis manage to keep their jobs (and their income) and others temporary workers, that when the skinny cows arrive they are the first to be laid off and lose their main source of income, aggravates the inequality between one recession and another. The success or failure of the newly approved labour reform of the Government will be measured in its capacity to reduce this duality and this high percentage of temporary workers.

“The big problem for young people in Spain is access to stable working conditions. It’s not just salary, but also the fact that because you don’t have stable income, being able to access a rent, a mortgage or being able to plan to have children is very difficult with a temporary contract,” says the UAB researcher Marion Lozano. This sociologist is the author of a pioneering study that analyzes the working lives of young adults in Spain between 1987 and 2017, whose main conclusion is that the years that young people spend in job insecurity have doubled in the last 30 years. “We do not have a sufficiently productive labor market to absorb the most qualified generation in history, it is not an individual issue,” he adds.

Bad crisis management

Returning to the report by Cantó and Ayala, another of the theses related to this chronic eventuality is that the Spanish economy does not manage crises well, since it generates more inequality during periods of economic recession from which it then reduces during subsequent years of recovery and prosperity. And there the authors of the work denounce the “limited redistributive capacity of taxes and benefits, which barely increased between 2015 and 2019″ and that during 2013 and 2019 “its incidence was almost neutral” when it came to containing the expansion of inequality. Spain is currently the state of the European Union, among the club of the most rich, which drags higher rates of inequality.

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What are the recipes that researchers propose to reverse this thinning of the middle class? On the one hand, correcting this redistributive deficit and “increasing the size and progressivity of the Tax system and extend non-contributory protection, especially that aimed at young people and households with minors”. And, on the other, to maintain the policy of continuing to raise the minimum interprofessional salary (SMI), not in vain Olga Cantó was one of the experts appointed by the Government for its advisory committee on SMI matters. This is the first matter that the Government has pending for this year, since it has not yet updated the minimum wage for 2022 and it is still at 965 euros from last year. The commitment expressed by the Executive in the last renewal -closed in October 2021- is to reach a SMI very close to 1,000 euros gross per month (in 14 payments) in the next financial year.