Walter Finch
THE number of people on the government payroll now outnumber the number working in the private sector in Spain.
Recent figures show that 18.21 million people in Spain are currently receiving state income through pensions, public sector salaries or social benefits.
This is compared to 17.69 million people earning through private enterprise, the Objective reports.
The worrying milestone marks a pivotal moment in the country’s economy and highlights growing concerns over future financial sustainability, with Spain’s ageing population at the heart of the issue.
The number of pensioners has soared to 9.2 million as of August, equal to 44% of the working population of just 21.6 million people, according to Spain’s National Statistics Institute (INE).
With only six in 10 people economically active out of a total population of 48.8 million, it means less than half of people in Spain are shouldering the country’s pension payments, which now exceed €12.8 billion per month.
And in a further ironic twist, state expenditure on pensions is growing at a faster rate for public sector retirees than for those in the private sector.
Pensions for civil servants, under Spain’s Clases Pasivas system, now account for nearly 711,000 beneficiaries, costing the state €1.57 billion monthly.
Of the Spanish population paying for these pensions, nearly half of Social Security contributors (46%) are now over 45, showcasing just how top-heavy Spain’s demographics have become.
Five years ago this figure sat at 41%, raising concerns about how the state will support an ever-larger pool of pensioners.
Meanwhile, August 2024 data shows that 1.8 million people in Spain were on the paro (unemployment benefits), and a further 1.96 million individuals, spanning 649,000 households, rely on the Minimum Living Income (IMV).
Adding further strain, the public sector workforce itself has also grown by 12% since December 2023 to over 3.6 million people – including employees of public enterprises and central and regional governments.
The uncontrolled growth of the government payroll stands in stark contrast to the generally positive economic growth Spain has been basking in.
This week Spain’s central bank upgraded its forecast for 2024’s economic performance from an already-healthy 2.3% to a eurozone-busting 2.8%.
This after posting growth of 2.5% in 2023 – more than any other large economy in Europe.
Most of this growth has come in the tourism sector with the nonstop greenlighting of new hotel and resort developments. However, these sorts of businesses tend to produce seasonal and ‘precarious’ service jobs.
The sector accounts for nearly 3 million jobs in Spain, up 3.5% on last year.
Meanwhile, unemployment has been falling over the long-term, most recently down 1.02% to 11.27% in the second quarter of this year.
Compared to the preceding three months, the number of unemployed people decreased by 222,600 to 2,755,300.
Very serious situation for Spain. These costs of government employees are just not sustainable in the long term. There might be a glimmer of hope in the unemployment numbers, if only the goverment would make it attractive to employers to hire more workers, increasing tax revenues and assist in evening out the equation. The government, anyway, should put a freeze on hiring new employees.