Do only 37% of Spain's population work? The figure dividing opinion
Only 37% of Spaniards work, yet 5 million pay income tax. The debate over who keeps the Spanish state afloat erupts with VAT and Social Security data
English · Original discussion in Spanish · Published
Do only 37% of Spain's population work? The numbers fuelling the debate
An employment rate of 37%: the figure economist Leticia Poole posted on El Blog Salmón has caused an uproar. At first glance, it paints an unsustainable country: barely 18 million employed out of 48 million inhabitants. But the nuance is key: it counts the total population, including children and retirees. If limited to the working-age population (16-67), the activity rate jumps to 59% according to some analyses. Even so, the core of the debate is not the snapshot, but who pays the bills.
Income tax: a country sustained by 5 million taxpayers
One thread of the debate focused on the distribution of IRPF (Spain's personal income tax). According to the figures cited, of 48 million Spaniards, only 21 million file the tax. That is, 27 million are left out. And within those 21 million, 80% of the IRPF collected is paid by those declaring more than €32,000 gross a year: roughly 5 million people, 25% of contributors. 15% of the revenue comes from those earning between €20,000 and €32,000 (8 million taxpayers), and only 5% comes from those declaring less than €20,000 (another 8 million). In short, 73% of the population — 35 million people — contributes barely 5% of IRPF. But the picture gets more complicated when other taxes are included.
VAT and Social Security: the silent burden on low incomes
The criticism of the above came quickly. Pointing out that the poor barely pay IRPF is a trap if regressive taxes are ignored. Social Security contributions and VAT take up to 40% of the pay of a worker on average or low incomes. By one calculation, those 8 million workers who contribute only 5% of IRPF pay around €70 billion between VAT and Social Security, 20% of the state's total revenue. Meanwhile, a large wealth holder with dividend income pays 19% in IRPF and barely contributes to Social Security, because their income does not come from a payroll. The paradox is that most IRPF revenue is paid by the rich, but most Social Security is paid by the poor, and Social Security raises more than IRPF.
International comparison: Spain is not that anomalous
To put things in context, data from other countries were provided. In Italy the proportion of employed people relative to the total population is lower; in France it is around the same level. Germany inflates its figures with Hartz IV, a disguised unemployment scheme. The United States, with 163 million employed out of 343 million, reaches 47%, one of the highest in the OECD. In Spain, using the government's looser metrics, the rate exceeds 40%. The problem is not so much the percentage of employed people as the structure of revenue and spending.
A country importing taxpayers
One of the sharpest observations points out that Spain not only has a small active population, but also imports taxpayers at a surprising rate, referring to immigration that does not always contribute. Meanwhile, the welfare state is sustained by the effort of a minority who, some say, are starting to wonder whether the game is still worth it.
The question left hanging: can a country be sustained where 5 million taxpayers bear 80% of IRPF, while the majority barely pays or receives more than they contribute? The debate is far from over.
Related discussions in the forum
An employment rate of 37%: the figure economist Leticia Poole posted on El Blog Salmón has caused an uproar. At first glance, it paints an unsustainable country: barely 18 million employed out of 48 million inhabitants. But the nuance is key: it counts the total population, including children and retirees. If limited to the working-age population (16-67), the activity rate jumps to 59% according to some analyses. Even so, the core of the debate is not the snapshot, but who pays the bills.
Income tax: a country sustained by 5 million taxpayers
One thread of the debate focused on the distribution of IRPF (Spain's personal income tax). According to the figures cited, of 48 million Spaniards, only 21 million file the tax. That is, 27 million are left out. And within those 21 million, 80% of the IRPF collected is paid by those declaring more than €32,000 gross a year: roughly 5 million people, 25% of contributors. 15% of the revenue comes from those earning between €20,000 and €32,000 (8 million taxpayers), and only 5% comes from those declaring less than €20,000 (another 8 million). In short, 73% of the population — 35 million people — contributes barely 5% of IRPF. But the picture gets more complicated when other taxes are included.
VAT and Social Security: the silent burden on low incomes
The criticism of the above came quickly. Pointing out that the poor barely pay IRPF is a trap if regressive taxes are ignored. Social Security contributions and VAT take up to 40% of the pay of a worker on average or low incomes. By one calculation, those 8 million workers who contribute only 5% of IRPF pay around €70 billion between VAT and Social Security, 20% of the state's total revenue. Meanwhile, a large wealth holder with dividend income pays 19% in IRPF and barely contributes to Social Security, because their income does not come from a payroll. The paradox is that most IRPF revenue is paid by the rich, but most Social Security is paid by the poor, and Social Security raises more than IRPF.
International comparison: Spain is not that anomalous
To put things in context, data from other countries were provided. In Italy the proportion of employed people relative to the total population is lower; in France it is around the same level. Germany inflates its figures with Hartz IV, a disguised unemployment scheme. The United States, with 163 million employed out of 343 million, reaches 47%, one of the highest in the OECD. In Spain, using the government's looser metrics, the rate exceeds 40%. The problem is not so much the percentage of employed people as the structure of revenue and spending.
A country importing taxpayers
One of the sharpest observations points out that Spain not only has a small active population, but also imports taxpayers at a surprising rate, referring to immigration that does not always contribute. Meanwhile, the welfare state is sustained by the effort of a minority who, some say, are starting to wonder whether the game is still worth it.
The question left hanging: can a country be sustained where 5 million taxpayers bear 80% of IRPF, while the majority barely pays or receives more than they contribute? The debate is far from over.
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Summary of a discussion on Burbuja.info - Foro de economía, actualidad y política., translated from Spanish and reviewed before publication. Read the full discussion (20 replies).
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