social security

   With the establishment of democracy in the late 1970s Spain rapidly began to assemble a welfare state comparable to those of western Europe. A massive programme of hospital building and the provision of universal free medical assistance (despite the continuation of a strong private sector traditionally patronized by the middle classes) were accompanied by a virtually new system of unemployment insurance and a vastly improved system of state pensions, with pension levels approaching salary level upon retirement and reaching two-thirds of the population. The number of people in receipt of state pensions doubled in twenty years, from three and a half million in the 1970s to seven million in the 1990s. A full pension is payable after 35 years of contributions, with lower entitlements pro-rata, but never falling below an established minimum subject to regular revision. There are in addition non-contributory pensions, both old age and disability, for those who did not have the opportunity to participate in the contributory scheme.

   The health service, which is run by the state agency INSALUD, is in principle offered to those who have paid contributions and to their dependants, as well as to those who lack the means to pay for their own medical treatment. In practice it functions as a near-universal free service, although medical appointments are normally held in hospital and outpatient departments rather than in doctors" surgeries, which remain largely in the parallel private sector. Medicines on prescription are normally subject to a charge of 40 percent of the sale price. Coverage of dental treatment is limited to emergencies. A programme for the transference of health services from central government to regional governments began in the mid-1990s.

   There are also numerous other welfare benefits, such as temporary incapacity benefit (as a result of illness or accident at work) payable for up to 30 months, permanent disability benefit, maternity benefit (payable for 16 weeks), widow(er)s" pensions, orphans" pensions, death benefit (to help with funeral costs), and indemnity compensation in cases of work-related deaths. To these provisions may be added those afforded by the social services agency INSERSO (dependent on the Ministry of Social Affairs), which not only arranges for home visits to those in need of help but which also has its own centres for occupational therapy and the rehabilitation and training of the physically and mentally handicapped. Increasing attention is being paid to the needs of the elderly and to improvements in their quality of life. In conclusion it can be said that Spain has developed an advanced Social Security system that in terms of cost as a percentage of GDP is approaching the European Union average. However, it is doubtful if the vastly increased costs can continue to be met by the state. The recession of the early 1990s and labour market reforms forced the government to curtail what was becoming an overgenerous system, and a thoroughgoing review was undertaken with a view to containing costs. In 1995 spending on Social Security amounted to nearly 11m2 pesetas (or 16 percent of GDP), whilst income from employers" and employees" contributions was just over 7m2 pesetas. The gap of about one-third of total cost has to be made up from general government revenues and was a significant contributor to the state's budgetary deficit of some 6.5 percent of GDP in 1995. Although Spain has one of the highest employer contribution rates in Europe (23.6 percent of an employee's salary), it also has one of the worst payment records, even on the part of regional government departments, public corporations and municipalities. Delayed payments and even nonpayment are common, but the central government is reluctant to take firm action for fear of worsening the already severe unemployment. In fact, despite the growing number of retired people in receipt of a pension, the overspend so far has been occurring mainly in the health service (threequarters of whose cost is being borne directly by the state), as a result of which the total separation of pensions from health is under consideration, with the state assuming the major responsibility for funding the health services and guaranteeing the minimum pension, while firms and individuals finance the bulk of the pension system. Additionally, because the workforce is virtually static whereas the number of pensioners is steadily increasing, pensions cannot indefinitely be paid out of revenue from current contributions, and private pension funds, scarcely known in Spain, are expected to experience an explosion over the coming years as an ageing population is increasingly obliged to take over responsibility for its own financial security after retirement.

   C. A. LONGHURST