People planning a vacation, buying a car, or facing end-of-month worries are common across many families in Spain, even as interest grows in markets abroad like Canada and the United States. Inflation has set a stubborn pace, and the Consumer Price Index (CPI) reached 9% in September. Costs keep climbing due to persistent supply issues and the global environment. The fact that everyday shopping is 9% more expensive than a year ago has serious consequences for households, especially those most vulnerable who cannot brace for unexpected expenses.
For decades, inequality and poverty have weighed on Spanish society, and the financial crisis more than a decade ago still resonates. Some households barely endured the great crisis of 2008 when the pandemic struck, as explained by Luis Ayala, a professor of Applied Economics at UNED and co-author of the latest Foessa report. Inequality in Spain has long been higher than in many peers, shaping how communities respond during weak periods. The roots of the problem, according to Ayala, lie in an uncompetitive model that relies on low wages, a structurally higher unemployment rate, and a public policy framework that offers limited redistribution capacity.
Along similar lines, Joaquín Maudos, deputy director of IVIE, links the rise in inequality to Spain’s low productivity. He notes that growth in efficiency is a key driver of prosperity, and that Spain lags behind competitors due to weak R&D investment and a labor structure that hinders progress. He adds that this gap helps explain a sizable portion of per-capita income when compared with neighboring economies. Eurostat data also show Spain’s GDP per capita sits about 18.5% below the eurozone average.
Economic literature suggests that growth and job creation tend to narrow inequality, but the post-2008 period saw the Gini coefficient in Spain rise and only begin to ease around 2017. The pandemic further pushed inequality higher. Experts describe this as an anomaly: during job disruptions like 2008, productivity and inequality move in the same direction. Once growth returns and employment rises, inequality does not fall as quickly. Ayala emphasizes that reducing inequality requires more than creating jobs; it demands quality jobs with stability and fair pay.
fees are too low
Labor-market data from the National Institute of Statistics (INE) paint a discouraging picture. The provisional employment rate sits around 22.5%. Moreover, about half of Spaniards earn less than 21,000 euros gross annually, according to the statistics agency. This signals a precarious labor market: roughly 10% of workers want more hours but cannot obtain them, leaving many with insufficient earnings or stunted professional growth opportunities.
Wage growth in Spain has not kept pace with rising living costs, eroding purchasing power for millions in key local sectors. A joint study by InfoJobs and Fotocasa shows that average monthly salaries have inched up by about 6% while asking prices for homes have climbed roughly 16% over the past five years. Mónica Pérez of InfoJobs notes that the pandemic slowed earnings growth between 2017 and 2020, a trend that may worsen amid energy constraints and ongoing supply issues, further squeezing workers’ buying power as inflation climbs. Fotocasa’s María Matos warns that inflation could widen the gap if rent and property prices keep rising and disposable incomes shrink further.
Poverty is on the rise in Spain
The cost of living and widening inequality leave one in three citizens struggling to cover unforeseen expenses, according to the Living Conditions Survey. Ayala explains that the biggest leaps in spending hit those with the lowest incomes, including essentials like food, utilities, and shelter, which form a core burden for the poorest decile of households.
Income shortages are leading to tighter belts on basic needs. A third of people cannot take a vacation, about one in seven cannot heat or cool their homes adequately, and 12.6% miss housing payments on time. In an era where digital access is essential, 6.5% cannot buy computers without compromising other basics. The pandemic and the shift to remote work have highlighted a deeper division: higher-earning, more secure workers versus a growing group dependent on in-person work, which remains precarious, according to Ayala.
As the Foessa study notes, less than half of households are insulated from some form of social exclusion. The report highlights that six million people in Spain face serious social exclusion in areas such as employment, education, political participation, and housing, a figure that represents a 50% rise since 2018. INE also shows that 27.8% of people are at risk of poverty, up from 21.5% four years earlier. Ayala stresses that inequality is multidimensional, with young people especially affected by low first wages and high rents. Fotocasa data from 2015–2021 show a 41% rise in housing costs and an average rental rate of 10.2 euros per square meter at the end of 2021, underscoring youth vulnerability and the challenge of achieving independence.
The role of the state
Beyond a weak economic model and labor-market volatility, the welfare state plays a key redistributive role. Ayala notes that inequality before taxes and benefits is not far from other European nations, but after transfers, disposable income in Spain is comparatively higher. Still, the redistribution policy remains weaker than in many peers. Maudos points out that taxation matters for curbing the concentration of income and wealth, but income inequality has risen in recent years while benefits are often not enough to offset wages. International comparisons show Spain’s tax burden is lighter than some EU partners, which informs the debate on potential reforms.
Experts caution that simple tax hikes or cuts cannot solve inequality. They argue against general policy changes that might fuel inflation and instead advocate targeted measures aimed at vulnerable groups. The consensus is that reducing inequality requires a broad, layered approach with interventions across sectors. The goal is to protect the most exposed while fostering a dynamic economy that can sustain all social classes. The state’s role, as described by Maudos, is to shield the crisis’s impact on the most vulnerable and support policies that promote sustainable, inclusive growth.