The Bank of Spain has warned in its annual report on the Spanish economy that the levels of inequality in Spanish society, which were already “high” before the pandemic, will foreseeably increase as a result of it, and has called for policies to redistribute the wealth.

According to the monetary authority, the pandemic is showing a “special negative impact” on some particularly vulnerable groups of workers, those with temporary contracts, younger people and those with lower incomes.

In this way, he assures that it seems “probable” that the current economic crisis will end up raising the levels of inequality in Spanish society, despite the measures that the authorities have deployed to mitigate the adverse effects of the pandemic on income and liquidity. of households.

More offer of housing for rent

Mitigating the adverse effects of inequality also requires favoring a stable increase in the supply of rental housing, according to the Bank of Spain, which is committed to favoring a sustained increase in the supply of rental housing, which would help “to avoid a excessive increase in the price of rents “.

In particular, it says that a combination of fiscal incentives for property owners, regulatory improvements that increase their legal security and a greater emphasis of public policies on the provision of public housing for rent could be considered.

“Beyond income policies, another area in which it would be convenient to act to reduce the adverse effects of inequality is relative to the conditions of access to housing, which have hardened in recent years, both in the case of of the property in property as in the one of the housing in rent “. Priority should be given to those public policies aimed at favoring a sustained increase in the supply of rental housing —especially, that destined for groups with greater accessibility problems—, initiatives that, as a whole, would help to avoid an excessive increase of the rental price. In particular, a combination of fiscal incentives for property owners, regulatory improvements that increase their legal security and a greater emphasis on public policies on the provision of public housing for rent could be considered. “

With the aim of reducing inequality, it is advocated to address the structural deficiencies in the Spanish labor market, which especially affect young people, and to increase their level of training.

In favor of extending the minimum income

The Bank of Spain is also inclined to analyze the different social transfer policies that are in force in various areas of the Public Administration, including health and education, as well as the operation of the tax system.

“The objective would be to assess whether, as a whole, these instruments make it possible to achieve the degree of redistribution of resources that society demands and if their operation is sufficiently efficient,” reiterates the Bank of Spain, adding that the degree of redistribution of these policies in Spain is lower than that observed in the EU average.

Specifically, it highlights that the approval of the Minimum Living Income (IMV) in May 2020 meant the introduction of a redistribution mechanism that could contribute “significantly” to alleviating extreme poverty in Spain to 1.5% from 5.7 Current%, according to INE data.

For the Bank of Spain, it might be appropriate to consider a possible extension of the IMV to some groups that, according to the initial design of this instrument, are not eligible, but who would also be at risk of extreme poverty.

For example, it states that this situation could affect certain low-income households that fail to meet the necessary condition to receive the IMV in terms of equity level, mainly due to the possession of low-value real estate assets, and some households with more than two Adults.