A notable development in Alicante’s labor market over the past year has highlighted the region’s important role for social security funds. A bolstered Social Security reserve has helped reduce the province’s substantial deficit, a deficit that swelled during the pandemic. This improvement comes just before the next pension reform, which is expected to raise contributions, particularly from higher earners.
According to the latest figures on how Social Security spends and earns money geographically, Alicante residents contributed 3.533 billion euros to the public system, a 17.4% rise through 2022 and higher than the 2019 level, the last year of normal activity before Covid-19. Of this amount, 3.496 million euros stemmed from social contributions paid by workers and employers via payrolls, which remain the system’s principal revenue source.
Yet this sum does not cover all costs. The province still faced a gap between revenue and expenses. In 2021 the gap was nearly 1,700 million euros; last year’s deficit stood at 1.241 million as total payments reached 4.770 million. Of these, 4.038 million went toward subsidized pensions, with the remainder covering other benefits such as maternity leave, temporary disability, and the administration’s operating expenses, including civil servants’ salaries.
The headquarters of the Social Security Treasury in Alicante stands as a visible sign of the system’s reach. This center plays a central role in managing funds and distributing pensions for the region, a responsibility that has gained particular attention in recent years.
The significant growth in Social Security revenues is linked to the rise in active contributors, that is, the number of employed workers who pay into the system. Alicante closed the year with a record number of participants, totaling 708,552 jobs, 25,211 more than the previous year. In terms of regime contributions, employed workers added 2.808 billion euros, up 23.7%; self-employed contributors added 395.5 million euros, up 18.27%. Beneficiaries drawing unemployment-related benefits saw a decline, with 280.3 million euros allocated to unemployment-related payments, down 23.9% from the prior period.
Reform to reassess 89,000 minimum pensions in the state of Alicante
With more workers in employment, changes to labor rules have come under scrutiny. A professor from Miguel Hernández University of Elche, Pedro Pablo Ortuno, notes that reforms aim to address limits on part-time and discontinuous contracts that were often used to fill roles with flexible hours. The shift away from rigid temporary contracts toward more stable arrangements is expected to influence contribution levels. When contracts require full-time work, premiums tend to be higher, affecting the overall pension system.
Pension policy also considers that last year’s slow hiring meant fewer workers entered the system, slowing Social Security revenue during the initial pandemic years. This context helps explain the revenue dynamics in Alicante and the broader national discussion about pension funding and long-term sustainability.
Tell me where you live in Alicante and I’ll tell you how much pension you get.
Official provincial data show 333,318 people contribute to retirement benefits, with an average pension of 1,031 euros per month. The largest group is retirees, with 215,439 beneficiaries and an average pension of 1,170 euros. Widows number 81,126, with monthly payments around 768 euros, while permanent disability benefits average 1,014 euros for the 23,107 Alicante residents who receive them.
Rising contributions will affect around 23,000 residents with higher earnings. The pension reform approved by the government and unions, though opposed by some employers, will raise Social Security contributions for higher earners. In addition to the intergenerational solidarity mechanism already in place, which increases from 0.6% to 1.2% over time, those with annual earnings above about 54,000 euros gross will see their bases and solidarity charges rise. This faces higher earners with a steeper contribution load to support the pension system’s future balance.
Locally, roughly 23,000 Alicante workers fall into the higher-earning bracket affected by the reform. The reform’s success in closing the gap between expenses and income remains a central question for Social Security as it seeks a stable, balanced budget for the region and the country as a whole.