A first approach to a pay-as-you-go model for a social benefit in Spain

Abstract

In recent years various domestic and international organisations have proposed financial coverage for the population as a whole. This does not mean that there is currently no coverage: aid in different countries extends to different levels. In this context a universal basic social benefit could be one way of responding to those international proposals. However, such a scheme might be too expensive to be viable, which might lead instead to partial benefits payable to non-workers being considered, as the group in most need of coverage. This paper seeks to analyse whether a model of financing can be found under which a basic minimum social benefit can be implemented in a way that is socially and financially viable and sustainable and can be maintained over time. Following the usual system for the distribution of budget allocations by public administrations, this model uses a multi-year period – in this case 12 financial years. Spain is presented as a case study, based on a number of forward-looking demographic and economic assumptions in which the various aid systems used in the country’s autonomous regions are brought together to provide a minimum coverage. The main conclusion drawn is that the current level of contributions is sufficient to provide a viable, sustainable partial social benefit. However, a universal benefit would require a considerable increase in extraordinary contributions to meet its cost, though those contributions could be replaced in part by extraordinary state contributions or funding from other sources.

Keywords

• Social Welfare
• pay as you go
• basic social benefit
• Social Security cost