First due to the maintenance of income during the pandemic, then with different measures ranging from the creation of the minimum vital income (IMV), to the automatic updating of pensions and the increase in the minimum wage, numerous policy actions economic have been carried out since 2019. What effect have these measures had on family income? If we pay attention to the description of the situation given by the Survey on living conditions according to the INE, whose latest edition was published at the end of February, the answer is that the measures were a success. From 2019 to 2022, the average income per person increased by 14.6% and by almost 3% when inflation is taken into account, the number of households increased by 2%, inequality decreased and the population at risk of poverty has been reduced despite extraordinary growth (14.2%). %) of the poverty line. However, when the analysis is performed using the National accounts household accounts, from the same INE, the result is a grim scenario with growth of only 5.9% in average income per person over this period and a decline of 4.9% at constant prices. A difference of 9 points. Which Spain should we stay in?
As readers of our articles know, we believe that the National Accounts (NC) have seriously underestimated the growth of the Spanish economy between 2019 and 2022. And the recent revision of September 2024 has only slightly alleviated the problem . A consequence of this weak and abnormal growth in GDP between 2019 and 2022 is the impossibility of assessing, within the framework of the CN, the progress observed in the Living Conditions Survey (LCS) both in family income as in reducing inequalities and poverty.
As the attached graph illustrates, until 2019 the disposable income per person of the ECV and that of the CN evolved in parallel, but since the pandemic the harmony is lost: at the CN the disposable income per person increases by 5.9% (before the last review, 4.1%) while according to the CVD, it increased by 14.6%.
Why use ECV? The main objective of the ECV is to understand inequalities and poverty in Spain and the autonomous communities, but for this analysis it requires information on household income, in addition to other personal variables of interest such such as age, sex, link to activity, level of training, nationality or type of accommodation.
Besides information richness, there are several reasons to trust LCA results. We will highlight three of them. The first is at the origin of the information captured by the CVD. Since 2013, the survey has combined the information declared by the people and households surveyed with information provided by the Tax Agency, the Provincial Treasury and the Register of Public Social Benefits managed by Social Security. This means that the ECV should not be considered as a simple household survey, but as an instrument for integrating, controlled by the INE, information from the Treasury and Social Security combined with that provided directly by the families. The second reason is transparency on the origin of the information, without equivalent in the annual CN (which, remember, publishes neither its sources nor its estimation methods). Each income data in the ECV sample is accompanied by a variable which indicates its origin (questionnaire, register or imputation). And the third is that, for each component of income, we can provide not only the overall amount, but also its distribution per person or per household, an essential element for the analysis, but also as an instrument for calibrating its reliability when it is used. can be compared with other available documents (for example, with salary distributions provided by the tax administration).
The main results proposed by the ECV on the evolution of Spanish households from 2019 to 2022, summarized in the attached table, are as follows:
Average disposable income per person increases by 14.6% and income per household by 13.5%. To properly evaluate these rates, we must remember that the CPI increased by 11.4% over this period, so we are facing a real improvement in family income, a gain in the purchasing power of income. Income per person at constant prices increased by 2.9% and income per household by 1.9%. The difference between growth per person and per household is due to the fact that the population increases by 1% over this period while the number of households increases by 2% and this dynamism in the creation of households can be seen as a reflection of the improvement in people’s economic conditions.
Inequalities in the distribution of income, measured by the S80/S20 ratio (average income of the top quintile over that of the bottom quintile) or by the Gini index, reduced during this period. The percentage of the population exposed to the risk of poverty, whose income is less than 60% of the median income, is reduced from 21% to 20.2%. Furthermore, the percentage of the population (0 to 65 years) living in households with low employment intensity is reduced from 10% to 8.4%. To understand this result, it must be borne in mind that the ECV itself allows the profession to be related to the number of people who receive remuneration each year as self-employed and/or employed by others. This population increases by 4.2% between 2019 and 2022, in line with the 3.9% employment growth reported by the EPA. This is another big difference between ECV and CN since, even after the recent revision, the number of people employed at CN only increased by 1.5% over the period (0.6% previously). Overall, the percentage of the population at risk of poverty or social exclusion (AROPE rate) is reduced from 27% to 26.5%, or around 100 thousand people. Only the percentage of the population suffering from serious material deficits, studied in detail by FUNCAS, increased during this period. But we must remember the subjective nature of this component of the AROPE rate, as well as the gap between price growth (higher in 2022) and that of personal income (higher in 2023).
As we said, the main objective of the ECV is not to publish revenue estimates, although this variable is fundamental to its objectives. For this reason, only some data on income (disposable income per household, per person and per consumption unit) are provided in the published results. However, it is possible to know the amount and composition of household income thanks to the microdata of households and individuals that the INE makes available to interested parties on its website. This is what makes it possible to compare the ECV data with those published by the CN (Non-financial annual accounts of institutional sectors, household sector) which have just been examined. The results are presented in the following table.
The results indicate that, in all components of income, except social benefits, growth between 2019 and 2022 in ECV far exceeds those estimated by the NC. And not only that: in the CN, the most dynamic component between 2019 and 2022 are social benefits, while in the ECV, it is income linked to economic activity (salaries and business income and rents). In fact, the difference between these incomes is overwhelming: according to the ECV, they increase by 21% between 2019 and 2022 and according to the CN by 10.2%. Two data from the same organization that describe completely different Spains, one in which policies result in an improvement in household activity and economic conditions, and another in which only income transfer works. Which one should we stick with?
A final reflection can be made from the last graph, which shows the nominal growth of gross income between 2019 and 2022, including the contribution of the main items (salaries, social benefits, etc.). In addition, differences between households are taken into account according to their income level, grouping them by deciles. There will be room in another article to detail this information, but for now it is enough to highlight one basic idea. For the poorest decile, the creation of the IMV was the fundamental driver for increasing their well-being. However, for the remaining 90%, the decisive contribution came from increased wage income, pensions and self-employed income. Growth and redistribution went hand in hand during these three years.
