Renting an apartment in Catalonia and Madrid is almost a feat for the more than 14 million people who live in both autonomous communities, where paying for a home takes half of the salary each month. It is well known that in these two regions the price of life is more expensive than the Spanish average: from having a coffee to taking public transport, all these daily actions involve a greater effort for the pockets of its inhabitants.
Housing burdens the poorest: 47% spend half of their income on these expenses compared to 2.2% of the rest of the population
For this reason, the price of life should be an element to take into account when calculating the risk of poverty and the money left over at the end of the month, after paying basic expenses. It should, but it isn’t. This is what the Institut d’Estudis Regionals i Metropolitans de Barcelona (IERMB) regrets, which, for the first time, has crossed the cost of living with disposable income, in order to obtain more realistic data on this subject.
The results that the study shows They are far from the reality that is drawn from the official figures, coming from the National Institute of Statistics (INE). Thus, in Catalonia there would be 1,200,000 people at risk of poverty (which represents an increase of 14.9%) and in Madrid there would be 1,400,000 (44% more). This means that there are 585,043 more people living below the poverty line than those controlled by the State. Half a million more citizens who find themselves with problems to face the cost of living.
“This study shows us that the data was not adjusted to reality and, if the data is not, the aid and benefits are not what they would touch either”, says Ricard Gomà, director of the IERMB, who regrets that in Spain there has been no I’ve done a report like this before. But this is not an issue that affects only the Spanish territory, but in Europe as a whole the price of life is not crossed with income, despite the fact that in 200, the European Parliament published a regulation that urged the states member to take these variables into account. But fifteen years later, it has still not been fulfilled.
This data crossing is something that is only done in the United States, which allows for a design of benefits and public aid “more adjusted to the real problems of the population”, as pointed out by Vittorio Galletto, director of the economic area of the IERMB and one of the authors of the study, in which economists from UPF, UAB, Barcelona City Council and the OECD also participated.
Less money available at the end of the year
“This report has undeniable political consequences”, assured Galletto, who considers that the current rankings, on which aid is calculated at the Spanish and European level, “possibly are not fair”. Currently, disposable income shows the money that families have annually after meeting their tax obligations. But, if the standard of living is taken into account (which the IERMB calculates based on INE indicators and adding the price of housing), three places are observed in which disposable income falls: Catalonia, Madrid and the Balearic Islands.
Applying this new variable, Madrid goes from being the second Autonomous Community with the most disposable income to the ninth. Catalonia drops from fourth to seventh place and, in the case of the Balearic Islands, the drop is from seventh to tenth place. “They are the three most stressed Spanish territories,” says Galletto, referring to high prices caused, among other things, by gentrification and tourism, which cause the cost of housing to rise to levels often above the income of the citizenship.
This study has been carried out with figures from 2018, the latest available and, therefore, does not yet consider the effects of current inflation or those of the socioeconomic crisis derived from the pandemic. “Taking into account the rise in prices and that salaries have been maintained, we can expect that today the rates of people at risk of poverty are even higher than those shown by our research,” warns the economist, who also regrets “the rates at those who publish the data, which will make us wait two years to be able to take an X-ray of the consequences of COVID-19”.
A review of public policies
Given the very different map that is shown through these new data, the authors of the report say that public policies should be adjusted. “If you want to equalize the purchasing power of families from one city to another, we should compensate the population that lives in a place with a higher cost of living with a higher income,” says Galletto.
In this line, from the IERMB various measures are considered that could be effective, such as adjusting social benefits to reality or adjusting the salary of public workers. In fact, this imbalance between the salary of an official (common for the entire country) and the standard of living means that there is a shortage of workers in some communities.
But one of the measures that the authors of the study consider would be more effective is to adapt the Interprofessional Minimum Wage to the reality of each Autonomous Community. This would be one of the most “fair” responses to the different prices of life, but “it would have strong political implications and would generate territorial problems, so it is something that, surely, is not politically interesting,” concludes Galletto.