This price crisis is pushing an increasing number of workers to skip certain essentials to make ends meet. This year, for example, more than one in four Spaniards who are employed will not be able to take a week-long vacation away from home. The share of workers who fear an unexpected expense will derail their budget is growing, and some will likely cut back on air conditioning in extreme heat or chill themselves in the winter to save money.
Income is rising more slowly than prices, leaving more workers with the sense they must tighten belts to avoid poverty. While poverty among the employed edged down slightly in 2022 compared with 2021, the tendency to forgo essential expenses increased across nearly all categories. Recent data show that 16.5% of employed people face the end-of-month squeeze, a figure that was 17.9% the previous year. This translates to about 3.3 million people, a level not seen since 2016. Yet working poverty remains higher than in the 2008 crisis, at around 13.4%. Low working hours per month continue to be a major driver of poverty among those who are employed.
On the positive side, the labor market expansion beyond pre-pandemic levels over the past year has helped reduce the share of workers in poverty. The total number of households with low employment density fell by about three percentage points last year to 8.6%, the lowest in the historical series. A recent rise in the minimum wage may also explain a substantial drop in labor poverty, with declines approaching half in certain measures so far this legislature.
Government officials point to this improvement in the job market to justify better inequality indicators. A government statement notes that the Gini index reached 32 points in 2022 (0 represents full equality and 100 maximum inequality), a benchmark the administration aims to improve by 2030.
More than 5 million workers cannot take vacation
The ongoing improvement in the labor market is tempered by at-risk groups and growing strain on household finances. Vacation time is often the first casualty when trying to balance accounts. About 26.7% of workers, roughly 5.4 million people, will not be able to take a week off this year. A separate figure shows that 30.8% of employees cannot cover unexpected expenses, such as a boiler breakdown or car repair, with their regular income.
One of the most troubling issues in the INE panel concerns affordability. A notable portion of workers cannot afford to eat meat or fish at least every other day. The share in this situation rose to 3.9% of employed people, or more than 80,000 individuals, up from 3.1% the year before.
The steep rise in energy costs is reflected in the data as well. The portion of workers who cannot keep their homes warm with their income jumped from 11.1% in 2021 to 14.6% in 2022. Because the INE survey uses a one-year lag for rent and mortgage data, the impact of higher interest rates and the Euribor will likely be visible in next year’s figures. Currently, about one in ten employees experiences regular delays in mortgage payments.