New retirees earn more than workers under 35 years of age in Spain
Pensioners receive 62% more than they contributed to the system, which also widens the generation gap in access to housing
Precarious salaries, difficulties in housing access and pensions for retirees that in many cases exceed the salaries of younger workers. The economic imbalance between generations in Spain continues to widen at a fast pace, threatening to take over from the gender gap which, although still present, has narrowed significantly in recent years.
According to a report by the Juan de Mariana institute, the wealth of those born in the 1980s is currently 46% less than that of those born in the 1960s when they reached the same age bracket. Risk management experts state that retirees currently receive 62% more than what they contributed to the system throughout their working lives.
The statistics are devastating. Young people under 35 have gone from owning 7.5% of the country's wealth to 2% in just two decades. In contrast, the over-75s have doubled their wealth, from 8% to over 20%.
This difference is as worrying as the wage gap between women and men of around 15% on average, which in recent years has been the focus of much of the government's attention in labour matters, although figures vary between institutions. According to trade unions, men earn 18% more than women, while other organisations such as Funcas point to a gap reduction of 10% in the last decade and place the difference at the end of 2024 at 8.7%.
The latest annual wage structure survey of the national institute of statistics (2023), indicates that the average annual salary of women was 25,591.31 euros, while that of men was 30,372.49 euros, with a difference of around 17%, also with a clear downward trend in recent years that contrasts with the widening of the intergenerational gap.
The reasons behind this gap are varied. The Juan de Mariana institute points out that while the real income of workers between 18 and 29 years of age has dropped by 3% between 2008 and 2024, that of the over-65s has risen by 18%. What is more, new pensioners already earn more than those under 35 years, with an average of 1,760 euros compared to 1,670 euros.
The authors of the report, who use statistics from the Bank of Spain and the national institute of statistics, state that what greatly contributes to this imbalance is the fact that the tax burden on young people to cover the pension hole is increasing. "The income dedicated to paying personal income tax and social security contributions now accounts for 39.5% of the labour cost of an average wage, compared to 31.8% observed in the OECD," the study states. The figure rises to 55% when other taxes are included: the Spanish IVA, property tax, etc.
Beyond income
Experts show that the inequality between young and old goes beyond income, extending to personal expectations. For example, the majority of homeowners are older people, while their children and grandchildren have serious difficulties in gaining access to housing.
According to the report, 81% of those born between 1945 and 1965 were already homeowners by the age of 42. This figure has fallen below 50% for those born after 1985. Today, the proportion of young people with mortgages barely reaches 20%, with prices already exceeding those of the housing bubble.
The Bank of Spain's latest survey of household finances also reflects this reality, showing that a large part of the income received by the over-65s comes from capital income, not only because of better salaries but rather because of profitable passive income - interest, dividends and, above all, rents.
Property is still the main source of wealth for Spaniards, accounting for three quarters of total wealth. The problem is, once again, that this accumulation is concentrated mainly in the older generations, as opposed to the difficulties young people have in accessing the market.
