Immigration fails to sustain Spain's welfare model
Mass immigration inflates GDP but not welfare: public services overwhelmed and pensions unsustainable. The data behind the debate.
English · Original discussion in Spanish · Published
Immigration does not save the welfare model: GDP grows, but welfare sinks
Can immigration save the welfare state? The data analysts handle suggest not, and the debate is hotter than ever. Spain receives around 600,000 immigrants per year, according to figures circulating in economic analysis. GDP grows, yes, but it is a cheap growth: more mouths to feed are added, not more output per person. Welfare, meanwhile, suffers.
GDP growing by aggregation, not productivity
Spain's economic growth is based on adding population, not on improving productivity. Every year hundreds of thousands of people enter who consume, but most do not contribute to GDP per capita. In fact, GDP per capita barely moves, while the aggregate rises. It is a national-scale racket: more people, more demand, more rentals, more basic services under strain. And when a consumption crisis hits, that artificial growth will deflate.
The hidden cost in public services
Public services are already at their limit. Some report that a gastroenterology appointment requested in May was cancelled in November, in the midst of Madrid's "Latin". The metro is packed, healthcare is saturated and housing is inaccessible for young people. Mass immigration does not alleviate these problems, it aggravates them. Newcomers compete for the same resources, and those with lower incomes end up depending on public aid that is unsustainable.
The pension pyramid scheme
The pension system is the most delicate point. A detailed analysis indicates that for every euro an immigrant contributes now, 1.3 euros will have to be paid to them when they retire. Only those earning more than 2,700 euros gross per month are profitable, a minority. To sustain the system, the flow of immigrants would need to increase year after year: if now it is 600,000, by 2035 900,000 would be needed, and by 2045, 1.5 million. It is a pyramid scheme that only works if it is fed indefinitely.
So the next time someone says immigration saves the model, ask them how many millions will be needed in 2045. The answer probably won't please you.
Can immigration save the welfare state? The data analysts handle suggest not, and the debate is hotter than ever. Spain receives around 600,000 immigrants per year, according to figures circulating in economic analysis. GDP grows, yes, but it is a cheap growth: more mouths to feed are added, not more output per person. Welfare, meanwhile, suffers.
GDP growing by aggregation, not productivity
Spain's economic growth is based on adding population, not on improving productivity. Every year hundreds of thousands of people enter who consume, but most do not contribute to GDP per capita. In fact, GDP per capita barely moves, while the aggregate rises. It is a national-scale racket: more people, more demand, more rentals, more basic services under strain. And when a consumption crisis hits, that artificial growth will deflate.
The hidden cost in public services
Public services are already at their limit. Some report that a gastroenterology appointment requested in May was cancelled in November, in the midst of Madrid's "Latin". The metro is packed, healthcare is saturated and housing is inaccessible for young people. Mass immigration does not alleviate these problems, it aggravates them. Newcomers compete for the same resources, and those with lower incomes end up depending on public aid that is unsustainable.
The pension pyramid scheme
The pension system is the most delicate point. A detailed analysis indicates that for every euro an immigrant contributes now, 1.3 euros will have to be paid to them when they retire. Only those earning more than 2,700 euros gross per month are profitable, a minority. To sustain the system, the flow of immigrants would need to increase year after year: if now it is 600,000, by 2035 900,000 would be needed, and by 2045, 1.5 million. It is a pyramid scheme that only works if it is fed indefinitely.
So the next time someone says immigration saves the model, ask them how many millions will be needed in 2045. The answer probably won't please you.
Summary of a discussion on Burbuja.info - Foro de economía, actualidad y política., translated from Spanish and reviewed before publication. Read the full discussion (94 replies).
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