Abstract
The objective of this study is to offer a snapshot of the level of unemployment protection provided in Spain to self-employed workers and platform economy workers, compared to employed workers affiliated with the general regime. This allows us to reflect on the convergent and divergent aspects of the protection provided to the two groups, as well as the greater or lesser proximity to the levels of protection indicated by the EU. Thus, the study is structured in three points: the protection afforded to the various groups and the differences in terms of the cessation of activity and unemployment benefit; some of the most characteristic aspects of these two types of unemployment protection; the financing of the cessation of activity benefit and the creation of an alternative protection mechanism as key points in the current Spanish political debate. Our final thoughts are presented in the conclusions.
Introduction
The Spanish Constitution of 1978 (CE, hereinafter) marks a turning point in the development of the social security regime in Spain. The Constitution recognises a state social security system that maintains the contributory social security model while introducing new concepts, such as assistance or non-contributory benefits and also acknowledges, although outside the public system, the supplementary private schemes.
The CE refers to a commitment and obligation assumed by the central State to preserve the public social security system, which is made up of three levels: the contributory level, the assistance or non-contributory level and the supplementary schemes.
The contributory level is profession-based and, according to Article 50 CE, the benefits that it provides cannot be minimal, but rather must be ‘sufficient’ and ‘adequate’. Although there is indeed no quantitative specification of what should be understood as sufficient or adequate, at least the Spanish Constitutional Court has indicated that these concepts must be understood in the sense of being close to an active wage, without measuring that sufficiency in terms of assistance. Unemployment benefit 1 is one of the benefits that the ordinary legislator includes in the contributory level, compensating for the loss of work, suspension of a contract or a reduction of the working day, but not its absence, as per Arts. 262 and 267 of the General Social Security Act (LGSS, hereinafter)-.
The non-contributory level is recognised in Article 41 CE as universal assistance financed by the State from taxation, in accordance with a Beveridge ideology and international declarations of human rights (for example, the UN Covenant on Economic, Social and Cultural Rights)-. The silence that the Constitution keeps concerning the definition of this level or the benefits that would have to be contained in it has been amply filled by legislation which, among other things, seeks to provide a closer definition by requiring minimum levels of contribution and compensating for the loss of employment, but not its absence (Art. 274 LGSS).
The supplementary level is residual and voluntary, perhaps designed for those on higher incomes. It is additional to the previous levels and provides individual benefits, which cannot be substituted. It is located outside of the Social Security regime as such, , being closer to private social protection. Unemployment insurance is one of the possible options offered by insurance companies, which will then pay the bills in the event of the policyholder running out of income. The specific situations of job loss and the conditions of access to this insurance are determined by each insurance company.
This is a public regime – not a contractual one – in which:
The State enjoys great discretion within public spending policy, since it must manage limited financial means in such a way as to meet many social needs. Hence, some aspects of the pension regime may be modified based on ‘situations of need, the general context, the economic circumstances, the availabilities of the moment and the needs of the various social groups’. Due to this discretion, the Spanish Supreme Court has rejected a claim for acquired rights or a principle of irreversibility. Private forms of system management through mutual societies and collaborating companies are not precluded. However, the entitlement to the service is public, which legitimises their management and operating requirements. Some services may be provided based on an agreement – for instance, healthcare or recovery and rehabilitation services – and companies may even fully pay some benefits at their own expense, in cases such as temporary disability due to a common cause There is a general scheme and other special schemes, for seafarers, agricultural workers, artists, the self-employed, and economically dependent workers (TRADE workers, hereinafter). Unequal treatment of these groups does not violate the principle of equality, since this differing treatment is due to differences in the labour, socioeconomic, historical, and productive circumstances, acknowledged by the legislator.
It should also be emphasised that in Spain, powers are distributed between the central government and the Autonomous Communities. Specifically, the central government is responsible for social security (Article 149.1.17 CE) and the ordering of supplementary levels (Art. 149.1.11 CE), while the Autonomous Communities are responsible for social assistance – economic assistance benefits such as social wages and minimum income guarantees (Art. 148 CE). The Autonomous Communities have no powers specifically in relation to unemployment benefits – contributory or non-contributory – except for organising the Public Employment Services, the offices where job seekers must register to trigger entitlement to unemployment benefits.
The personal scope of the system has, overall, gradually become distanced from dependent work. The central figure is still the employee, in both the general and the special regimes, but new subjects have also been incorporated, whose work is not subject to an employment contract, but takes place within other legal relationships. These workers are described as ‘assimilated’: university students, for example, who carry out internships in companies, whether paid or not (formerly Article 34 of Royal Decree-Law 2/2023 of 16 March 2023). The social security contributory level comprises two regimes. The general regime is for dependent workers, including platform workers who provide services consisting of the distribution of any product, according to the 23rd additional provision of the Spanish Workers’ Statute (ET, hereinafter)-. The special regimes are for the self-employed, TRADE workers (with or without employees), agricultural workers, seafarers, miners, domestic employees, members of cooperatives and students. Civil and commercial public officials are covered by the special civil service pension regime.
The non-contributory level of social security shares this expansive vision, which encompasses all those working or living in Spain. For residents, and exclusively regarding health care, permanent disability and retirement benefits, their entitlement to inclusion is based on lack of income, not performance of a professional activity. Both workers and residents must also meet the eligibility requirements of the non-contributory level: they must have come to the end of any unemployment benefit and have family responsibilities, or, if they have no family responsibilities, they must be 45 years of age when the benefit runs out, or be a returned migrant worker with no entitlement to unemployment benefits.
Spanish cessation of activity and unemployment benefits and their coverage
In Spain, unemployment protection is called different things depending on the protected group. Thus, ‘unemployment protection’ is for dependent workers or platform workers considered as such. However, for the self-employed and TRADE workers, this benefit is known as ‘protection against cessation of activity’.
Consequently, to describe who is covered by cessation of activity and unemployment protection in Spain, and thus address more specific aspects of this benefit, we need to differentiate between three legal categories of workers.
Self-employed workers and economically dependent workers. Two legal concepts and one form of protection
Law 20/2007 on the Self-Employment Statute (LETA, hereinafter) differentiates between two types of self-employed – the ‘self-employed’ and the ‘economically dependent workers’ (TRADE). Two main features distinguish TRADE workers from the self-employed: a) at least 75% of a TRADE worker's income must come from a single client; and b) they cannot have employees (Art. 11 LETA).
Although these two groups are dealt with separately in the law, cessation of activity protection is available to and identical for both. It is a protective measure granted to self-employed and TRADE workers who are in a legal situation of cessation of activity – understood as a loss of professional activity due to reasons beyond their control. The said cessation must amount to a total stopping of economic or professional activity, and may be permanent or temporary.
If compared to the unemployment protection provided to employees affiliated with the general regime, some nuances can be found. This differential treatment does not exist in the non-contributory level of unemployment protection, since the self-employed and TRADE workers are redirected by the national legislator to the common provisions for the unemployed in the general regime.
As indicated in the introduction to this study, the cessation of activity protection for self-employed and TRADE workers, although it began as voluntary, is now described as mandatory, according to Royal Decree-Law 28/2018. It should be noted that the Spanish legislator has not set a minimum income for eligibility for unemployment insurance, but income thresholds exist to determine the contribution bases. These should be understood as the calculated total monthly income from work of an employee 2 or a self-employed worker. 3 According to Royal Decree-Law 13/2022 of 26 July, which sets a new contribution system for self-employed and TRADE workers for 2023, the minimum and maximum contribution bases are respectively 751.63€ and 849.66€ for self-employed and TRADE workers with a net monthly work income less than or equal to 670€. The minimum and maximum contribution bases are respectively 1928.10€ and 4495.50€, when the net monthly work income is above 6000€. 4
This is an important consideration, given that some platform workers are considered as self-employed or TRADE workers. Although we will return to this issue in the following section, it is interesting to point out the serious problem related to the mini salaries that platform workers receive on a daily or even monthly basis. It is especially hard to understand how these workers can have a contribution basis of 751.63€ if their daily salary barely amounts to 20€. There are two options available to someone in this situation. Firstly, they may choose not to contribute to the unemployment regime, so they will not be entitled to the benefit – either contributory or non-contributory – when they become unemployed. Such an example reveals a clear weakening of the social and labour protection safety net, which should include measures to avoid tipping those who need it most into poverty. The other option is to develop platform work as a side job and to combine it with other jobs – moonlighting – or with self-employment – pluriactivity. Both moonlighting and pluriactivity are allowed in Spain. When moonlighting, the employee contributes for the individual working day, and the maximum daily contribution basis cannot be exceeded, even if this is indeed the case when the contribution bases for the various jobs performed are added together. In the case of pluriactivity, however, the regulatory bases are not added together; rather, there are two independent bases. The worker can choose his/her contributory basis, i.e. between contributing 50% of the minimum basis – as laid down in the Annual General Budget Law – or up to 75% of the maximum bases set by the Special Regime for the Self-employed.
Platform worker: three legal concepts and two forms of protection
Regarding platform workers, two subgroups must be identified, depending on whether they are excluded from or covered by the framework designated by Law 12/2021 of 28 September2021. This norm was the result of social dialogue, as set out in the Agreement adopted on 10 March 10 2021 between the national government, the unions UGT and CCOO and the business associations CEOE and CEPYE. The discussions highlighted the enormous technical difficulties involved in the legal categorisation of productive relationships whose defining features blur the traditional elements of employment to such an extent that they almost become imperceptible or non-existent. However, the aim of the formula finally agreed upon was to guarantee that the technological revolution will transfer its beneficial effects in a balanced way to ensure social progress. A presumption is therefore established in favour of the platform worker, while still allowing the parties a free decision on the legal regime applicable to their productive relationship. Two years after this hard-won solution, authors conclude that it has not been warmly welcomed either by employers or by workers, since both sides are forced to seek judicial decisions in case of disagreement regarding the legal nature of their productive relationship. This means months of waiting, the need to hire legal representatives, expenses, and interruptions that not everyone is willing to accept; consequently, employee status is never officially recognised. On the other hand, the problem of recognition of employee status has, in recent months, been followed by other issues, such as improvement of labour rights, illegal assignment of workers, the exercise of collective rights, prevention of occupational hazards, etc.
Focusing now on Law 12/2021, its main innovation is to expressly extend the presumption of employment contained in Article 8 ET to those platform workers distributing goods or merchandise for employers who exercise business powers of organisation, direction and control through algorithmic management of the service or working conditions through a digital platform (former 23rd additional provision, ET). Therefore, in each case, it is up to the worker to request a declaration of dependent worker status and up to the defendant to rebut this presumption. If this presumption is not rebutted, these platform delivery workers are considered employees for all purposes, also concerning unemployment protection – whether contributory or non-contributory. Consequently, unemployment protection is mandatory, and the minimum and maximum income limits applied are the same as those for employees affiliated with the general regime. In Spain, the minimum and maximum thresholds for social security protection are related to the specific contribution group in which the employee is classified. There are currently 11 of these groups, with the thresholds set, for group 1, the highest contributing group, at 1759.50€ net per month – minimum – and 4495.50€ net or more per month – maximum. Group 11 has the lowest level of contributions, which range between 42€ net per day – the minimum basis – and 149.85€ net per day – the maximum basis. 5 In 2023, for those in Group 11, the minimum level of unemployment benefit is 560€ (without children) and 749€ for a person with dependent children; the maximum is 1225€ for a worker without children, 1400€ for a person with one child and 1575€ for a person with more than one dependent child. 6
The second subgroup of platform workers are those not considered to be employees, because they are not or because the presumption of employment has been disproved. They are treated as self-employed or TRADE workers, and the above-mentioned rules on cessation of activity protection apply to them without exemptions or modifications.
Specific aspects of cessation of activity and unemployment protection in Spain
Having presented the personal scope of the cessation of activity and unemployment benefits in Spain, it is necessary to reflect on other aspects, to give a complete picture of the Spanish system. Hence, in this section, we describe, in general terms, the protection provided by the unemployment benefit, indicating the requirements which beneficiaries must meet in order to access the benefit, how it is financed and the modalities that apply. All these elements will be compared with the general scheme for dependent workers, to highlight any differences which may exist between the regimes.
Content of cessation of activity and unemployment protection
Unemployment and cessation of activity protection are two specific and different actions assumed by the public powers.
Thus, for the unemployment benefit, the protective action includes the payment of an economic benefit to the unemployed dependent worker and payment of the company’s social security contributions during the period of receipt of the benefits (Art. 265 LGSS), except for the parts corresponding to unemployment, work accidents, occupational diseases and payments to the Salary Guarantee Fund (FOGASA, hereinafter). The protection also includes vocational training (on termination of the employment relationship).
The cessation of activity protection includes the payment of an economic benefit to the inactive self-employed or TRADE worker, and a 50% exemption from paying social security contributions to the corresponding scheme, unless the person is a victim of gender violence or sexual violence, in which case they are fully exempted from any payment of contributions (Art. 329 LGSS). 7
Eligibility conditions for unemployment benefit
Six conditions must be met in order to be entitled to cessation of activity benefit in Spain. Although these conditions will be presented later on in the article, the main conclusion to be drawn is that they are broadly parallel to the conditions applicable to employees affiliated with the general regime. There are, however, some slight differences, as we shall now explain.
Affiliation. The specific case of ‘assimilated’ workers. The first requirement is to be previously affiliated with one of the regimes which make up the Social Security system. Self-employed and TRADE workers need to be registered with the special regime, while platform workers who have obtained employee status only need to be affiliated with the general regime. Affiliation, even though it is mandatory for all three groups – the self-employed, TRADE workers and employees – is much more flexible for employees, as they are the only group which can be ‘assimilated’ to affiliated workers (Art. 266 LGSS). This possibility of assimilation is not available to the self-employed or TRADE workers, and represents the maintenance of the citizens’ legal link with the Social Security regime, protecting their rights as workers even though they are not carrying out normal work activities. They do not contribute but are considered as ‘contributors’, although they are not registered as such in the system. It is a legal fiction which can apply, for example, in cases of unemployment, temporary disability or leave of absence to care for children.
A minimum level of contributions without gaps. Partial exemption for self-employed and TRADE workers. The second and fifth conditions may be presented together, because they both refer to the need to have contributed for a minimum period without any gaps.
Self-employed and TRADE workers must have contributed for a minimum of 12 months in the 48 months immediately preceding the cessation of activity, although these 12 months cannot have been taken into account for a prior right of the same nature (Art. 338.4 a), b) and c) LGSS). For employees subject to the general regime, although a minimum of 12 months of contributions are required, the time period taken into account for calculation of eligibility is the six years preceding the legal situation of unemployment or the moment in which the obligation to contribute ceased (for those who are ‘assimilated’). These differences are an added barrier against self-employed and TRADE workers becoming eligible or gaining access to the unemployment benefit, specifically in a situation such as the Spanish market, where unemployment rates reach an average of 12.4%. On the other hand, an average of around 500,000 people register as self-employed every year. Of these, 470,000 ceased making contributions in that particular year. Therefore, only about 30,000 self-employed per year survive. These data prompt us to make two suggestions: to extend the number of reference years from which the minimum number of months of contribution are cumulated; and for this period to be extended to match the period taken into account for dependent workers.
The fifth requirement, however, is that the individual should be up to date with his or her payment of social security contributions. The Spanish Supreme Court has agreed that this requirement may be qualified, and consequently, self-employed and TRADE workers can pay these contributions in the 30 calendar days before the application for termination. In its ruling No. 2663/2014 of 27 October 2015, 8 the Supreme Court states that admission after the causative event never validates the lack of contributions because ‘admit otherwise it would mean an unfair purchase of pensions, without the slightest risk of randomness’. This fifth condition, however, does not apply to employees; it is an added eligibility barrier for self-employed or TRADE workers who, due to possible difficult economic circumstances, have not been able to remedy these gaps in contributions.
Involuntary cessation of activity and readiness to enhance employability. Requirement number three is closely related to number six 9 ; in fact, they are two sides of the same coin. This is the requirement that the cessation of activity or the unemployment situation should be involuntary. The person concerned is therefore required to demonstrate that their situation is not of their choice, and must clearly show willingness to look for a new job or business activity and to take part in measures to enhance their employability
Hence, requirement number three refers to the importance of signing an ‘activity agreement’ to facilitate prompt reincorporation into the labour market and productive work.
Specifically, according to Article 3 of Employment Act 3/2023 of 28 February 2023, this is an agreement concerning training activities, careers guidance, and promotion of entrepreneurial activity. In the case of the self-employed and TRADE workers, the Act does not expressly state whether this requirement also extends to the acceptance of job offers as dependent workers; nevertheless, it is understood that, in accordance with ILO Convention No. 122, any placement would not be suitable unless it is accepted by the job seeker. A parallel provision exists for employees subject to the general regime (Art. 266.c) LGSS). Failure to comply with such obligations can be qualified as a minor infraction (Art. 24.3.c) Law on Infractions and Sanctions in the Social Order (LISOS, hereinafter)), or a serious infraction (Art. 25.4 LISOS), which, if committed four times, results in withdrawal of the benefit.
Finally, the individual in question must be in a legal situation of cessation of activity or unemployment, which can be definitive or temporary. Unemployment may also be total or partial.
Below, we present the causes that the legislator sets as sufficient to generate this declaration. Nevertheless, it is important to emphasise that all of them are based on a premise that must also be observed for dependent workers: the cessation of activity in any of its forms should have occurred for reasons not attributable to the beneficiary (Arts. 267 and 331 LGSS). Consequently, voluntary cessation of activity or unemployment will never be considered a legal situation of unemployment, and in such cases there is no entitlement to the corresponding benefit.
The causes validly considered to originate the situation of legal cessation of activity may be divided into two categories: one strictly related to the professional or productive activity and the other related to the individual’s circumstances.
In the first group, for employees, valid causes of unemployment are: objective dismissal, suspension, or reduction of working time, for economic, technical, productive or organisational reasons which must be sufficiently justified by the employer. A situation of total unemployment means the total cessation of activity by the employee for full, continuous, or alternate days, during at least one ordinary workday, by the temporary suspension of the contract or temporary reduction of working hours, decided by the employer or due to a legal situation of bankruptcy (Art. 262.2 LGSS). Partial unemployment is when the worker suffers a temporary reduction in his ordinary daily work schedule, of between 10 and 70%, provided that the salary is subject to a similar reduction (Art. 262.3 LGSS). In these cases, partial unemployment benefit can be combined with a part-time job, before or after the benefit (Art. 270.3 LGSS). However, the sum of the amounts received cannot exceed the maximum amount of the unemployment benefit (Art. 270.3 LGSS).
For self-employed and TRADE workers, economic, technical, productive or organisational reasons are considered enough to justify both definitive and temporary cessation. For the self-employed, Article 330 LGSS states that these reasons should make it unfeasible to continue the economic or professional activity, and requires any establishment open to the public to close during the period of receipt of the benefit. 10 Specifically, such economic, technical, productive, or organizational reasons are assumed to exist when, over a full year, the business incurs losses of more than 10% of the annual income, excluding the first year of activity. The justifications include not only bankruptcy but also enforcement of judicial or administrative acts to collect debts acknowledged by the executive bodies of an amount equivalent to 30% of the income of the immediately preceding fiscal year.
On the other hand, in situations of partial cessation of activity – for which the benefit will be paid at 50% – the legislator requires proof of a 60% reduction in the working day of all self-employed employees or the temporary suspension of contracts of 60% of the total number of workers on the payroll when there is a 75% reduction in income in the financial year and the net output of each worker is below the Interprofessional Minimum Salary (IMS, hereinafter)-. In these cases of partial cessation of activity, the self-employed person must not carry out another activity unless he or she was in a situation of multiple activities at the time of the event causing the cessation (Art. 342.3 LGSS). Only then can the cessation benefit be combined with remuneration for the dependent work that was being carried out. However, the average monthly remuneration of the last four months immediately before the start of entitlement to the cessation benefit must be lower than the IMS in force which triggers the entitlement. When there are no employees, a situation of cessation of activity is deemed to occur when the business has debts amounting to 150% of the ordinary income during the two fiscal quarters before the claim and when this income is 75% lower than the income registered in the same periods of the previous year. Debts to the Social Security or Tax Administration shall not be included in this calculation. The net monthly income of the self-employed person during these quarters, from all their economic or professional activities, should be below the IMS, or below his or her contribution basis if this is lower. In these cases, there is no requirement to close the establishment or transfer it to third parties.
Secondly, for employees, self-employed and TRADE workers, a series of situations due to external factors but affecting the individual’s circumstances are accepted as valid reasons for cessation of activity and unemployment. The following are seen as cases of force majeure: declaration of a state of emergency by the competent public authority, resulting in a 75% drop in income and a drop in the monthly income of the self-employed worker to below the IMS; loss of administrative license, as long this is not due to criminal behaviour; gender violence or sexual violence; divorce or marital separation, when the self-employed or TRADE worker was active in his/her spouse's company; death, retirement or disability of the client – specifically for TRADE workers – or of the employer – specifically for employees.
According to the Spanish legislator, sufficient evidence of these situations must be provided by the beneficiaries, following the specific rules and procedures set out in Articles 267.3 and 332 LGSS. However, despite these rigidities, no provisions exist concerning monitoring of the definitive, temporary, total or partial situation of cessation of activity or unemployment, which opens a possible door for fraud.
Unemployment benefit
Focusing now on the benefit, and not only on the protection, the next lines seek to complete the picture, considering key aspects such as the level of the benefits, their duration, their modulation when combined with part-time jobs or when the protection is also partial or temporary.
Guidelines to calculate the cessation of activity and unemployment benefits
As described earlier in this article, protection against cessation of activity and unemployment consists of a double payment: of social security contributions and of an economic benefit, determined by the income of the employee, TRADE or self-employed worker.
Despite the differences, which will be explained in detail, the maximum and minimum duration of the benefits are identical, as well as the equivalence of monthly benefit payments based on the number of months contributed to generate the right. The minimum number of months of contribution needed is 12, and the maximum is 48.
The minimum 12-month contribution period corresponds to four months of benefits, while the maximum of 48 months results in 24 monthly payments. Once these 24 are exhausted, the right to receive a contributory benefit lapses and the complementary non-contributory mechanism kicks in; as previously indicated, this is identical for dependent, self-employed and TRADE workers.
Concerning the 12 months minimum, the time interval taken into consideration to verify whether this requirement is met differs considerably. For the self-employed and TRADE workers, the reference interval is the most recent 24 months out of a period of 48, 11 while for dependent workers, it is the six years immediately before the start of the period of unemployment. 12 This quantitative disparity puts the self-employed and TRADE workers at a disadvantage, with less certainty of receiving a regular income or even of maintaining their professional activity. 13 In contrast, the longest period of reference has been granted to dependent workers, who have more guarantees of continuing to receive a salary and of staying in employment. 14
Finally, if the unemployed or inactive person cannot reach the stipulated minimum – of 12 months – he or she is referred to the non-contributory scheme. If he/she does not meet the requirements for this scheme either, the last option is social assistance.
There are further differences too regarding the amounts of the benefits and the restrictions which apply. For this reason, they are presented separately below.
Unemployment benefit for dependent workers
For this category of workers, the regulatory basis is taken as the average of the contribution bases of the last 180 working days before termination. For the first 180 days, the unemployment benefit is set at 70% of the regulatory basis; from day 181 it is 60% of the basis.
These amounts cannot be less than the minimum limit or higher than the maximum limit set by the Law, according to the public multiple effects income indicator (IPREM, hereinafter) and depending on whether or not the person in question has dependent children. For the year 2023, these limits are as follows: a minimum of 560€ (without children) and 749€ (with dependent children), and a maximum of 1225€ (without children), 1400€ (with one child) and 1575€ (more than one dependent child).
It is legally admissible in Spain for a person in multiple jobs to claim partial unemployment protection under Article 270 LGSS.
For dependent workers, multiple activities are allowed before or after the unemployment situation.
Thus, if the worker provides services subject to two part-time contracts and loses one of them, the regulatory basis for the unemployment benefit will be the average of the partial bases for which contributions to the scheme have been made in both jobs over the previous 180 days, in a reference period of six years. The minimum and maximum amounts are determined by the IPREM, based on the number of hours worked in both jobs. The partial unemployment benefit is set in proportion to the reduction in the working day.
The second possibility is that the worker combines the unemployment benefit with a part-time job that he obtains after receiving the benefit. The duration of the benefit does not change, but it will be reduced in proportion to his working day. If, when this job ends, the benefit period has not come to an end and the worker claims resumption of the benefit, he will receive the full amount until the benefit period lapses or he finds a new job.
Cessation of activity benefit for self-employed and TRADE workers
For self-employed and TRADE workers, benefit will be set at 70% of the regulatory basis, calculated according to the average of the bases for which the worker has contributed during the 12 months before the legal situation of cessation of activity. In 2023, the maximum amount is 175% of the IPREM (1050€/month), unless the person in question has one or more dependent children, in which case it amounts to 200% (1200€/month) or 225% (1350€/month). The minimum varies between 107% (642€/month) and 80% (480€/month), depending on whether or not the person has dependent children.
Unlike the provisions just referred to concerning dependent workers, self-employed and TRADE workers can enjoy partial cessation of activity benefits if they were previously in a situation of multiple activities. Therefore, they cannot combine the unemployment benefit with a part-time job after becoming a beneficiary.
We explain in a previous section how a salary can be combined with unemployment benefits.
Cessation of activity and unemployment benefit: mid-way between the poverty threshold and the concept of an adequate living standard. If we compare the minima and maxima with the data presented below, we conclude that the Spanish legislator is seeking to strike a balance, in the event of involuntary lack of income from work, mid-way between the poverty threshold and an adequate standard of living.
Specifically, in its Articles 41 and 50, the Spanish Constitution states that the benefits provided by the contributory and non-contributory levels must not be minimal, but rather ‘sufficient’ and ‘adequate’. Although there is indeed no quantitative specification of what should be understood by such sufficiency or adequacy, at least the Spanish Constitutional Court has indicated that these concepts should be understood as ‘being close to active wages and without measuring that sufficiency in terms of care’. To achieve this, the legislator uses as reference criteria both the IMS and the IPREM, published annually and updated based on the Spanish average income level.
For 2023, the IMS stands at 1080€/month, the IPREM at 600€/month and the average income at 2286€/month. This places Spain in nineteenth place among the members of the European Economic Area.
If we compare both the unemployment benefit and the cessation of activity benefit with the IMS, the minimum represents approximately 60% and the maximum nearly 125%. However, if we compare them with average income, the minimum is almost 28% and the maximum barely 50%.
It is very difficult to conclude that these figures satisfy the constitutional requirement to guarantee a ‘sufficient’ and ‘adequate’ level of benefit. The benefits are furthest from this ideal when incomes are lower, which are precisely the times of greatest weakness for citizens. The legislator, seeking to preserve the fragile balance between the duty to work and the right to sufficient social benefits in case of unemployment, seems to have tipped the balance towards the first of these poles, thus making citizens assume responsibility for situations of unemployment or cessation of activity proven to be involuntary.
Some overall comparisons concerning unemployment and cessation of activity protection
A comparative reading of the unemployment protection regimes for employees, self-employed and TRADE workers – three groups which may include platform workers – suggests, in general terms, that the distance between them is not only limited but also decreasing.
In addition, the current design of the unemployment protection provided to dependent, self-employed and TRADE workers does not take into account the income from mini-salaries of platform workers. Unless they opt for moonlighting or pluriactivity, they remain on the fringes of this protection, precisely when their situation in the labour market is most fragile.
On the other hand, a comparison of these protection schemes shows that despite the similarity, there are also differences between them, consideration of which is key to extending the coverage provided in cases of cessation of activity or unemployment. Especially noteworthy, and positive, is the non-existence of a specific unemployment subsidy for self-employed and TRADE workers. Thus, once they have exhausted the contributory benefit, or if they do not meet the minimum requirements, both these categories of workers are redirected to the general scheme. This achieves the intended convergence and could be an advantage for these workers. On the negative side, we have seen that there is greater flexibility for dependent workers regarding partial protection against unemployment or cessation of activity. In the same way, the protection for dependent workers, and the possibility of ‘assimilation’, are also more advantageous for this group, which can be considered as contributors despite not contributing. This aspect, however, can be counterbalanced by the ruling of the Supreme Court that self-employed and TRADE workers may pay the contributions they owe in order to generate entitlement to the benefit. Finally, concerning the amounts received, it must be reiterated that, while both benefits fall some way short of the sufficiency and adequacy promised by the Constitution, the shortfall is slightly greater for self-employed and TRADE workers because their benefits are lower.
Financing the cessation of activity benefit and alternative protection mechanisms: the current political debate in Spain
The current political debate in Spain is focused on how to improve cessation of activity protection. This is revealed by one of the most recent legislative reforms, which strengthens its financing and enhances protection with the so-called ‘RED mechanism’. We have therefore chosen to address these two subjects in this concluding section.
Unemployment and cessation of activity benefits are financed in the same way, from mandatory contributions made specifically to these schemes by the affected groups.
For the self-employed and TRADE workers, there has now been an important change to the financing of benefits, justified by the need to maintain the financial sustainability of the protection system.
Until the adoption of Royal Decree-Law 13/2022, on 26 July 2022, these groups did not need to adapt their contribution bases and periods to their levels of income. Instead, each person chose the range within which he or she wished to contribute. As a result, vast numbers opted for the minimum ranges, which in no way enhanced the stability of the already weakened Social Security system. With the new Law, the contribution bases and periods must be in line with the income of the self-employed or TRADE worker, according to the applicable contribution rate set annually in the General State Budget Law.
Secondly, the RED Mechanism, 15 also regulated through Royal Decree-Law 13/2022, is designed as a benefit helping self-employed and TRADE workers to maintain their professional activity in cyclical or sectoral crises. While initially limited to dependent workers, it has been extended to these other groups and thus maintains features that are parallel to those for employees.
This benefit is financed from the contributions for cessation of activity and administered by mutual societies working with the Social Security and the Social Marine Institute. It covers two types of situation: maintaining the activity of self-employed and TRADE workers in a sector affected by a RED mechanism in its cyclical form – no minimum contribution is required – and help for those affected by a RED mechanism in its sectoral form – the minimum contribution is required. In both cases, the protective action involves payment by the managing entity of 50% of the contributions of the self-employed or TRADE worker, in the form of a single payment. This does not affect the contributions already made to the cessation of activity scheme. Finally, importantly, it cannot be combined with dependent or self-employed work, cessation of activity benefits, active insertion income or any other benefit from the Social Security system.
The new rules on financing and the RED mechanism may therefore be considered as key elements of protection, which increase the number of instruments available to ensure economic survival of these traditionally neglected groups in the event of cessation of activity.
All these measures suggest that serious mistakes were made in the design of the Spanish cessation of activity protection, but that attempts are currently underway to remedy them. The most important missteps concern the undermining of the sustainability of the Social Security system, and the difficulty of guaranteeing the ‘adequate protection’ foreseen in the Constitution. In this regard, the pathways recently taken by the Spanish legislator are aimed at reversing these tendencies. We cannot yet, however, assess their effectiveness, so need to remain vigilant.
Footnotes
Declaration of conflicting interests
The author declared no potential conflicts of interest with respect to the research, authorship and/or publication of this article.
Funding
The author received no financial support for the research, authorship and/or publication of this article.
