Spain's over‑52 unemployment subsidy hampers job return and adds billions to Social Security costs

The unemployment subsidy for workers over 52, reformed in 2019, has lifted the number of recipients by more than 300,000, pushing the annual cost of the benefit to €1.818 billion by 2030 and a present‑value fiscal burden of €17.9 billion. Analysts say the aid, which pays 80 % of the IPREM (about €480 per month) and includes a 125 % pension contribution from the state, creates a hybrid income that reduces incentives for seniors to seek employment, especially in low‑pay or part‑time jobs. The Bank of Spain flagged the subsidy as the most distortionary passive‑employment policy, noting only 8.9 % of its recipients returned to work in 2022 versus 29.9 % for other benefits. Data from the Labour Force Survey show the share of long‑term unemployed over 50 rising from 35.7 % in 2019 to 50 % in 2026, indicating growing difficulty for older job seekers. Governor José Luis Escrivá has called for a review of the scheme, suggesting possible limits on duration, reductions in the over‑cotisation, or tighter activation requirements. The debate centers on balancing protection for senior workers with the need to improve labour‑market participation and curb escalating public‑sector costs.