Spanish Government’s budget cuts mean that those out of work will lose out on an average of €222 per month

Barcelona (ACN). - The adjustment of unemployment benefit decided on by the Spanish Government in July will mean that after the sixth month, unemployed people will lose out on an average of €222 a month, according to Cristina Faciaben of the Workers Commissions (CCOO), one of the largest trade unions in Spain. In addition, Faciaben said that the principal group affected by these reforms will be those aged between 45 and 55. Many of those without a job are long-term unemployed, do not receive any unemployment benefits and will no longer qualify for the Active Insertion Income of €426. This subsidy comes into effect when other contributory unemployment benefits have been exhausted. In Catalonia, 108,300 people aged between 45 and 55 years old will no longer receive this benefit. Also, a report by the General Union of Workers (UGT) highlighted that in June there were 615,576 people without work in Catalonia; 37.58% were long-term unemployed (more than 12 months of unemployment) and of these, almost 90% no longer receive any form of benefit. The report also reveals that 60.22% of the long-term unemployed are over 45 years of age, a group that according to the UGT is at serious risk of social exclusion.

Faciaben, of the CCOO, is convinced that the last series of measures adopted by the Spanish Government to reduce the deficit will not achieve its objective, and on the contrary will lead to a worsening of the economic crisis, especially coupled with the fall in consumption. Faciaben added that although the reform has a broad impact on different economic sectors, the report only covers the impact on unemployment benefits.

The report calculates the cut of the contributory benefit paid to people after being made redundant and to those who have exhausted their contributory benefit period. In addition, it also takes into account those who are on unemployment lists without any right to regular benefits and are therefore beneficiaries of a subsidy, such as the Active Insertion Income.

Growing unemployment and decreasing coverage rate

Faciaben explained that the measures approved by the Spanish Government coincides with a situation where unemployment is growing and the coverage rate, which measures the number of unemployed who receive some type of benefit, is decreasing. Between May 2010 and May this year the number of unemployed people has grown by 56,196 in Catalonia, while unemployed individuals entitled to protection of the benefit was reduced by 34,859 people. This means that 1 out of 3 unemployed people in Catalonia does not receive any kind of financial assistance from the state. The unemployment coverage rate has passed from 79.8% in May 2010 to 67.1% in May this year, losing 12.6 percentage points in just 2 years.

Reduction in benefit

The Spanish Government’s last budget cuts approved in July reduce the amount of contributory benefit that people who have been made redundant are entitled to after the sixth month of being unemployed. The unemployed used to be paid 60% of their gross salary after the sixth month of receiving the benefits, which the reforms have now reduced to 50%. In addition, the approved changes will also stop partial subsidies for Social Security contributions for the unemployed. Up until now the unemployed had a bonus of 3.05% for Social Security contributions and they only had to pay the difference up to 4.7%. After the reforms, workers must pay the full 4.7% contribution, which will reduce their benefits by an average of €333 a year.

The unemployed will contribute €222 per month

With the removal of the subsidies for Social Security contributions and the decrease in the amount paid to those made recently redundant from 60% of their gross salary to 50%, each unemployed person will additionally contribute on average €2,658 per year or €222 a month for deficit reduction. Cristina Faciaben said that this cut in benefits is “unfair” since these reductions should not affect those in the “worst” situation, those without jobs and with a family structure weakened by the economic crisis. 

Faciaben also stated that the cuts coincide with an increase in VAT from September 1^st, the majority of products will be more expensive and this will reduce the purchasing power of most consumers, including unemployed people.

The people aged between 45 and 55 years old

While the average will be €222 euros a month, the reforms will hit harder the group of people who are unemployed and are not entitled to the contributory benefit because they did not sufficiently contribute to the system or have exhausted their contributory benefit period. The age group primarily affected by this are people between 45 and 55 years old. Currently of the 219,000 people who are unemployed and over 45 years old, nearly half, 108,300 people receive no subsidy or provision and therefore as a cause of the reforms will not receive any subsidy, not even the Minimum Insertion Income of €426 per month.