OECD Spain report points to 22% of Spanish children in poverty, highest figure in Western Europe


The OECD questions the viability of the two main reforms, pensions and labour, and the ecological transition, and questions the fiscal policy applied, as well as noting the halt in economic growth in 2024, which it reduces to 1.5%.

Clare Lombardelli, chief economist of the OECD, during the presentation of the Economic Survey of Spain, criticised the lack of results in aspects such as unemployment, productivity, education and inequalities. She called for a reduction in the unemployment rate – double the EU average and well above the OECD average -, the development of fiscal consolidation based on efficient spending and a change in taxation, an increase in low productivity – among the lowest in developed countries – and an end to the increase in inequality, to put an end to the increase in inequality and systemic poverty -the highest in the western world, 22% of the population, and well above the OECD average-, and to put an end to the educational and employment problems of young people, whose unemployment rate is three times the European average and leads this ranking.

The OECD calls for “stronger and more sustained fiscal consolidation, to keep high public debt on a downward trajectory”, especially when it warns that the long-term increase in health and pension spending will be prolonged over time, especially in the case of pensions, where it predicts that spending will rise unchecked until 2040.

The report warns that the revaluation of this benefit with the CPI is going to cause a “considerable increase” in the system, and therefore proposes delaying the retirement age, “linking the legal retirement age to life expectancy at the time of retirement, as we already recommended in 2021”, and making an “appropriate” reduction in the amount of these benefits. In addition, the pension calculation period “should be extended, most likely to at least 40 years, to ensure financial sustainability”, they insist.

“If the social security deficit continues to be covered by general revenues, pensions will be maintained at the expense of other priorities and to the detriment of the already disadvantaged younger generation.

The report is also critical of the consequences of the repeated increases in the minimum wage (SMI), which explains that having raised it by 47% since 2018 has had a “detrimental impact on employment”, especially in the group of young people, who have seen their working hours reduced by the reduction of working hours and triggered the causes of their dismissal, so they ask for restraint when addressing new increases and that these are related to “productivity” and adapt to the “conditions of the labour market”.

The report particularly highlights the income inequalities and poverty accumulated in recent years, especially among women, a much higher level of poverty compared to the OECD, which the government has not reduced. According to the report, “one in four people in Spain is poor or at risk of poverty and social exclusion, and child poverty is still the highest in Western Europe, at almost 22%”. For this reason, she calls for social aid to be targeted at those most in need, especially low-income families with children, the extension of the Minimum Living Income, which has failed to achieve its proposed objectives, and improving the integration of women, especially mothers, into the labour market, which “should continue to be a priority to reduce income inequalities”.

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The Corner
The Corner has a team of on-the-ground reporters in capital cities ranging from New York to Beijing. Their stories are edited by the teams at the Spanish magazine Consejeros (for members of companies’ boards of directors) and at the stock market news site Consenso Del Mercado (market consensus). They have worked in economics and communication for over 25 years.