A notable development in Alicante’s labor market has drawn attention over the past year. Social Security funding has risen, helping to reduce a sizable provincial deficit that grew during the pandemic. This improvement comes at a moment when the system faces a pension reform that will raise contributions, particularly for higher earners, as new rules are phased in.
According to the latest data on how Social Security spends and earns money in the region, residents of Alicante contributed 3.533 billion euros to the public system in 2022, a rise of 17.4% from the previous year and higher than 2019, the last year before the pandemic. About 3.496 million of this amount came from social contributions paid through payrolls by workers and employers, which remains the main income source for the system.
Yet this sum does not cover all costs. The province still faced a gap between revenue and expenses, though narrower than in 2021. Last year’s deficit reached 1.241 billion euros, with total payments at 4.770 billion. Of this total, 4.038 billion covered subsidized pensions, while the remainder funded other benefits such as maternity leave, temporary disability, and the administration’s own operating costs, including civil service salaries.
The central office in Alicante underscores the rise in SGK revenues largely due to a robust increase in affiliated workers. The province saw a record number of participants throughout the year, ending with a total of 708,552 jobs, an increase of 25,211 from the previous year.
Contributions by wage earners and employers amounted to 2.808 billion euros, a 23.7% rise, while self-employment contributed 395.5 million euros, up 18.27%. Beneficiaries paying their own share of unemployment benefits, which remains on the books, decreased by 23.9% to 280.3 million euros.
Reform to reassess 89,000 minimum pensions in Alicante
With more workers employed, changes in labor regulations are under discussion. A professor from Miguel Hernández University, Pedro Pablo Ortuno, notes the need to address limits on part-time contracts and the growth of permanent arrangements, which, unless regulated by the relevant industry agreement, can push up premiums for full-time workers.
It is also worth noting that last year saw very few delays in work, a factor that contributed to lower Social Security revenues during the early pandemic years.
Tell me where you live in Alicante and I’ll tell you how much pension you get
National figures show 333,318 people drawing an old-age pension in the province, with an average monthly payment around 1,031 euros. The largest group, retirees, totals 215,439 beneficiaries with an average pension of about 1,170 euros. Widows number 81,126 with monthly payments near 768 euros, while about 23,107 Alicante residents receive an average of 1,014 euros for permanent disability benefits.
About 23,000 higher-earning Alicante residents will face higher contributions under the pension reform, approved by the government and unions but opposed by employers. The reform introduces an intergenerational equity mechanism already paid since January 1 and planned to rise from 0.6% to 1.2% in coming years. In addition, those earning more than roughly 54,000 euros gross annually sit on the maximum contribution base and are affected by a solidarity quota intended to fund the retirement reserve.
In Alicante, the latest wage data from the Tax Agency indicate around 23,000 workers will be affected by these surcharges as their income exceeds the threshold.
The key question remains whether the reform will restore balance between Social Security’s expenses and income.