The middle class is shrinking 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 accept that you are going to get temporary contracts. If you are lucky, it will take an entire course, if not a few months,” he resigned himself. At 28, he shares an apartment and does not even consider moving into a mortgage. “Are you scratching with me?” he replies at that prospect. At his age, his father, a telecommunications engineer, already had his first daughter and paid for the apartment in the Les Corts neighborhood in Barcelona. Enrique’s father, now retired, embodies the prototype of middle class which his son could not maintain for the time being.

Sandra He is the same age as Henry. She is autonomous and works as a graphic designer for various clients, from small companies to some public administrations, such as city councils or the Barcelona Provincial Council. He also shares an apartment, because with his income of just over a thousand euros per month – “some months go better on average and others not so much,” he points out – maintaining a rent in the Catalan capital it is an exercise in financial torture that he refuses to try. Her parents – now owners of a small courier company – also had her at the age of 28, in an apartment paid for in tocateja in the Sant Martí district. “On top of that, they now want to increase my independent fee. I’m pissed … It’s not that I do not want to contribute anymore, but how am I going to do it if they do not. Pay me more?” kla Sandra.

If the middle class was historically defined by a home ownership and a stable job with adequate and stable income to arrive without fear at the end of the month, neither Sandra nor Enrique meet either of the two requirements. And it is that these types of workers with decent working conditions and incomes in Spain are dwindling, unlike other European countries, thinning out year after year due to the lack of generational relief. “The generations that have been with the working market they 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 La Caixa Foundation Social Observatory.

What are the consequences of this progressive loss of the middle class? “The social glue is lost and in the long run society is becoming polarized, something we have already seen historically in Latin America. Without a middle class, the state loses its ability to finance the major cohesion policies, such as health, education or pensions. Which ultimately causes a segregation between public services of increasingly lower quality, due to that lack of resources, and private services obtained by the higher classes, who try to stop contributing to these public services because they already paid for their private services. . Is a watchmaker 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 real fiscal abandonment of the hyper-rich, both in Spain and in the world,” the second vice-president warned, Yolanda Diaz, last Friday in an act with the French economist Thomas Piketty.

‘Millennials’, with two crises in tow

The report, also prepared by the Professor of Economics at the UNED Luis Ayala, confirms that the average income group 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 it emphasizes 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 decreased the most, was the EU country where the income of the poorest 10% decreased the most compared to the richest 10%”, the researchers point out. And it is that the ‘millennials’ have not found it easy to plan and consolidate their vital trajectories and in a little over a decade they have dragged two crises of extraordinary depth – those of 2008 and those of covid – on their backs. .

Two of the focal points of this inequality are the capital income, which is more concentrated in some hands than in others, but the others are found in the world of work. And it is that there is more and more one layer of workers who earn a lot and another who earns very little. According to the study, the richest 20% of the population receives more than 43% of the earnings income on behalf of others. “The greater weight of this income in total income makes them the ones who contribute 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 this is the chronic labor duality, between some indefinite workers who manage to keep their jobs (and their income) during the crisis and others temporary workers, that when the lean cows arrive they are the first to be laid off and lose their main source of income, the inequality between one recession and another worsens. The success or failure of the newly approved labor reform of the Government will be measured in its ability 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 only salary, but also the fact that because you do not have a stable income, access to a rent, a mortgage or to be able to plan having children is very difficult with a temporary contract, ”says the UAB researcher Mariona Lozano. This sociologist is the author of a groundbreaking study analyzing the working lives of young adults in Spain between 1987 and 2017, the main conclusion of which is that the years 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 added.

Bad crisis management

Returning to the report by Cantó and Ayala, another of the theses related to this chronic event, is that the Spanish economy does not manage crises well, as it generates more inequality during periods of economic recession from which it then diminishes during the subsequent years of recovery and prosperity. And there the authors of the work condemn the “limited redistributive capacity of taxes and benefits, which barely increased between 2015 and 2019 “and that during 2013 and 2019” its prevalence was almost neutral “when it comes to limiting the expansion of inequality. Spain is currently the state of the European Union, under the club of the richest, who drag higher rates of inequality.

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What are the recipes that researchers are proposing to reverse this middle-class thinning? On the one hand, the correction of this redistribution deficit and the “increase in the size and progressiveness of the Tax system and to extend non-contributory protection, in particular to young people, and households with minors”. And, on the other hand, to maintain the policy of continuing to minimum interprofessional salary (SMI), not for nothing Olga Cantó was one of the experts appointed by the Government for its advisory committee on SMI matters. This is the first case the Government has pending for this year, as it has not yet updated the minimum wage for 2022 and it is still at 965 euros from last year. The commitment made by the Executive Management in the last renewal – which was concluded in October 2021 – is to reach an SMI very close to 1 000 euros gross per month (in 14 payments) in the next financial year.