Malaga province pensioners paid 25% less than Basque Country residents

This is 25% higher than the lowest retirement pension in Spain, which is in Ourense (1,140.44 euros), but also 25% below the highest in the country, in the three Basque provinces: Vizcaya and Álava, where the average pension exceeds 1,900 euros, and Guipúzcoa with 1,856.74 euros.

Compared with the average state pension, which stands at 1,574.93 euros, the figure for Malaga is around 8.5% lower. Other Andalusian provinces rank lower, such as Almeria, Jaén and Cordoba: in the former, the monthly payment is less than 1,300 euros, while in the latter it is just under 1,320 euros and in the third it is less than 1,330 euros.

By contrast, the average retirement pension in Cadiz is among the highest in the country, at 1,617.30 euros, very close to that of Barcelona (1,652.51 euros).

Although the lowest pensions in Spain are in Ourense and Lugo and despite the fact that three Andalusian provinces are among those with the lowest retirement pension payments, the region with the lowest average pension is neither Galicia (1,357.67 euros) nor Andalucía (1,431.92 euros), but Extremadura (1,346.24 euros).

What accounts for this disparity in Spain, which ranges from just over 1,100 euros in some Galician provinces to more than 1,900 in the Basque provinces?

A report by Instituto BBVA answers the question, why is the average retirement pension in the Basque Country more than 45% higher than that in Extremadura (and 25% higher than in Malaga)?

It states: "The financial value of pensions is derived from historical contribution bases that are closely linked to wages." The document delves into the analysis of two factors: apparent labour productivity (GDP per person in employment) and average wage costs (remuneration per employee net of employers' Social Security contributions).

It concludes that the region with the highest labour productivity is the Basque Country, at 82,387 euros per year according to the latest available data for 2023, compared with the region with the lowest, the Canary Islands, where it is less than 60,000 euros. Meanwhile, in Andalucía, GDP per person (the source does not provide data by province) stands at 61,609 euros.

Meanwhile, the region with the highest net pay per employee is once again the Basque Country, where it exceeds 44,000 euros, compared with Extremadura, which has the lowest average wage at 32,324 euros.

In Andalucía, the figure barely reaches 34,537 euros. Pensions are calculated on the basis of contribution levels in the years prior to retirement, so if wages in the Basque Country are higher than in Andalucía, Extremadura or Galicia, the same applies to pensions.

There is a third factor linked to this: the level of wages correlates with the amount contributed, which in turn determines the pension received. According to the latest data provided by the BBVA study, the highest average annual contribution is once again in the Basque Country, at 7,255 euros per year, compared with the lowest in Extremadura (5,319 euros), while in Andalucía it rises slightly to 5,663 euros.

Wages and the resulting contribution bases are closely linked to the sectoral structure of the economy in the region under analysis. Industry is associated with higher wages. This is not only due to its higher productivity, but also because it is the sector most conducive to strong collective bargaining, higher wages under collective agreements and a high proportion of workers contributing at the maximum contribution base.

This is no longer the case, because, at present, the most industrialised province in Spain is Burgos, with 30% of its workforce employed in the manufacturing sector, according to the latest labour force survey (EPA).

Ten and 15 years ago in Álava more than 30% of jobs were in industry. The figures in Guipúzcoa, Navarre and La Rioja were similar. At the other end are Las Palmas, Almería, Santa Cruz de Tenerife, Malaga, Granada and the Balearic Islands, where 15 years ago industry employed less than 10% of the workforce, a figure which is now even lower, standing at 5%.

Furthermore, the number of retirement pensions in the province (this is not strictly the number of pensioners, but the two figures are bound to be similar) stands at 186,192. This places Malaga ninth in the ranking, despite being the sixth most populous province in the country.

Ahead of it are Madrid, Barcelona, Valencia, Seville, Alicante, A Coruña, Vizcaya and Asturias. The BBVA report also offers an explanation for this: it notes that in regions such as Asturias, Castilla y León and Galicia, more than 25% of the population is at least 65 years of age, which immediately translates into a very significant pensioner population.

Furthermore, while the average age in Andalucía is around 43, in Asturias it exceeds 49. This explains why Asturias, with just over a million inhabitants, has more pensioners than Malaga, which has a population of over 1.8 million.

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