Unemployment benefits have become a battleground for the Labor and Economy ministries this week. This, like many others, is a reform promised to Brussels and must be approved before the end of the year, since it relates to fourth payment European next generation funds. But Sumar and the PSOE used this to build a political profile and discredit their opponents, despite their status as government partners.

The purpose of this article is to explain where the need arose to reform this subsidy, which today is received by 800,000 Spaniards who are either not eligible for unemployment or it has ended, and whose amount today is 480 euros per month (80% of IPREM). This also represents an approach to how assistance, also known as unemployment benefits at the assistance level, and includes some experts’ views on where legislative changes should be directed.

But first, a brief chronology. tension between both ministries The economy began this Monday when Calviño’s office began to explain how the aforementioned reform, which has so far been led by Labor, should be approached. This attitude angered Diaz, who, in a meeting with reporters, outlined a red line: he would not tolerate any benefit cuts or interference from another agency.

They insisted they were negotiators on the measure with Brussels and blamed the economy for believing that by targeting the unemployed they would find work faster, and for wanting a return to People’s Party laws. Calviño’s ministry, for its part, did not reveal exactly what its approach was, but stressed that it in no way included aid cuts.

Labor wants to expand subsidies; Economy, strive for full employment

The reform proposals can be read in full here, but in general terms they are as follows. Labor favors increasing the unemployment benefit, widening its scope to cover those under 45 as well as farm workers, and providing 45 days of work compatibility, which would involve increased spending. Economía suggests that benefits should be charged slightly more at the start and then reduced to encourage job search, as well as stricter monitoring of the unemployed’s efforts to find one. Díaz believes that this vision stigmatizes the unemployed; Calviño, it’s time to act full employment and this could be achieved in this way.

In that Recovery plan There is explicit talk of “expanding” these benefits – this is also included in the program agreement between PSOE and Sumar – but it is not specified how. It has only been established that the Government must organize, for the convenience of beneficiaries, a system of similar benefits that it currently has. The reform does not involve any financing.

Complementarity with employment at the center

“One of the main elements that I see can lead to the failure of reform is the removal of complementarity,” he points out. Manuel Hidalgo, Professor of Economics at the Pablo de Olavide University of Seville. “And you say: but Labor is proposing that the subsidy should be an additional 45 days. Yes, but that’s the same thing as canceling it because it’s not about how much you charge, it’s about making it black or white. There must be a big difference because we are talking about people who have no other income.”

It makes no sense that the subsidy does not supplement employment. “It’s not about how much you charge, it’s about making it black or white.”

For an economist, It makes no sense that the subsidy is not additional. Already today, the collection of wages takes as long as a year, as he claims, happens in other European countries. If you want to convince a person to take a risk and accept a job with the possibility of being fired or failing probation and therefore having to wait a month to receive the subsidy payment again, you need to offer some guarantee that it will be worth it.

These doubts can plague the unemployed, especially if subsidies are high or if work is insecure. This is why Hidalgo considers the idea of ​​the “Economy” to establish complementarity in employment for a long period of time appropriate, and the idea of ​​the “Labour Party” to increase the amount to 660 euros for the first months (to be precise, 110% IPRE) to be delicate. “Increasing benefits is an incentive to remain unemployed. It sounds harsh and I recognize that you have to meet the needs of these people, but at the same time you have to encourage them to get back to work,” he says, acknowledging that Calviño’s ideas may be more unpopular, although he believes they prove that they are more effective.

Some studies claim that the lower the benefit, the higher the likelihood of finding a job, and that this especially happens when the economy is growing – among other things, wages are higher. They also note that when beneficiaries are close to ending benefits, they are more likely to find work. But what other economists regret is how little the impact of cutting these benefits on the lives of those unable to find work again, such as on their mental health, has been measured.

By focusing only on subsidies we misfocus the debate. “We have refused to lose the battle for active employment policies.”

Where is the balance point? For the economist EsadeEcPol Javier Martinez, Because they specialize in the labor market, the debate should focus less on how to change these subsidies to promote employment for the long-term unemployed and more on what other tools are not working in the process. “We see a problem: there is a group of people in a situation of relative poverty. And by focusing only on subsidies, we misfocus the debate and abandon the fight for an active employment policy simply because there is a feeling that we have never worked and will not work, and they are the most important thing,” he emphasizes.

“We cannot create a job system that is neither effective nor efficient,” Martinez laments, recalling that 90% of unemployment benefit recipients are over 50 years old. Some of these are construction workers who left the labor market during the crisis and were unable to find employment again. To get them back into the job market, this economist knows it needs to focus on providing them with specialized training, or perhaps incentivizing companies to hire them or easing the transition from training to employment.

Returning to the debate again, the question that economists say ministries should be asking – and addressing with data – is whether subsidy beneficiaries are actually not looking for work, or whether they are looking but not getting one. And what effect will the measures taken have? “Do we really want to force people to accept jobs for which they are not suited and which are unstable? I think it’s not optimal,” Martinez reflects. The ball is now in Labour’s court, which is poised to approve the changes before the end of the year, and the unions and employers who will soon be called to the social dialogue table to negotiate reform.