Will the reform cut unemployment benefits?
The reform maintains a net increase in support for unemployed workers. It expands both the total amount paid and the eligibility pool, in contrast to prior rules. Some analysts aligned with Fedea estimate annual costs around 2.5 billion euros, a figure the Ministry of Labor contests as excessive.
On one side, the reform broadens eligibility for subsidies to include younger unemployment beneficiaries under 45 without dependents, as well as agricultural workers in regions such as Andalusia or Extremadura who already access subsidies. It also covers those who can demonstrate a shorter contribution period of six months, even when family responsibilities are absent. Overall, the reform is expected to extend the potential beneficiary base by roughly 400,000 people.
Additionally, the reform raises the subsidy itself. Historically the subsidy over the typical 30-month period equaled 80% of IPREM, currently about 480 euros. The reform raises the initial aid and then declines it gradually:
- First semester: 570 euros or 95% of IPREM
- Months 6 to 12: 540 euros or 90% of IPREM
- From month 12 onward: 480 euros or 80% of IPREM
(IPREM is a government reference that is periodically updated, with expectations of a 2024 revaluation that would raise benefit levels.)
Moreover, the reform includes a provision that eliminates the waiting period between the end of contributions and the start of the subsidy, effectively removing a 30-day gap in access to resources for the unemployed.
So why is Podemos talking about cuts?
In practice, the reform includes some reductions in specific areas. At present, the State contributes to Social Security for workers over 52 with a subsidy set at 125% of the minimum contribution base, a rate calibrated annually against the interprofessional minimum wage. The reform plans a gradual reduction to 100 percent by 2028. The level of contributions used to calculate future pension benefits makes this reduction significant, and Podemos argues that it translates into a cut for this group, which is the core reason for their opposition to the decree.
Why did the government decide on this adjustment?
The administration argues that reducing the subsidy base from 125% to 100% follows a sustained rise in the minimum wage and a series of improvements in social safety nets. With the minimum wage having increased substantially in recent years, proponents say it no longer makes sense to base benefits on a higher multiplier than the current base. The government also notes that broader economic indicators justify recalibrating the subsidy base to align with contemporary labor conditions.
What solution will unions propose on Monday?
Leaders from CCOO and UGT, including Unai Sordo and Pepe Álvarez, acknowledge that lowering the subsidy base from 125% to 100% represents a real cut for those over 52 who rely on subsidies. At the same time, they recognize that accepting jobs at or near the minimum wage could become more attractive if higher state contributions accompany continued unemployment.
Their proposed path on Monday involves maintaining 125% for long-term unemployed workers over 52 while ensuring that jobs paying at least the minimum interprofessional wage also contribute 125% of the base. In the unions’ plan, the private sector would contribute more than 100% of the base, with the remaining 25% supplemented by public funds. They argue that public spending to support this approach would be offset by future savings from reduced subsidy costs, ultimately encouraging greater participation in the labor market.
From the unions’ perspective, public investments in this approach would be justified by greater eligibility for retraining and higher employment retention, which could translate into long-term savings and a healthier labor market.
What will happen next?
In practical terms, Congress’s overturning of Royal Decree 7/2023 does not immediately affect the long-term unemployed, as the revised subsidy would not take effect until June 1, 2024. Still, the discussion around a new decree is timely and ongoing.
Meanwhile, the repeal of the decree created knock-on effects for other measures that began on January 1. If the decree is not approved, certain provisions, including regulations on breastfeeding leave, would be impacted. The proposed breastfeeding leave changes would allow workers with newborns to extend their daily leave by up to one hour and potentially access up to 28 consecutive days of paid leave, distributed in blocks or in flexible configurations.
The reform also tightens how subsidies interact with other forms of aid, such as training grants or internships undertaken by beneficiaries or their family members. It also revisits enforcement for aid reductions, offering new options for suspending subsidies during violations. The management of unemployment capitalization is expected to see additional improvements, aligning with the broader goal of more effective unemployment support and, ideally, greater labor market participation. Citations: ministry statements and parliamentary analyses reported in policy briefings from 2024 and subsequent reviews by social partners (as reported by official records and observers).