The Young and the Old at the Spanish Labor Market

A few months ago, at one of the events organized by Gender Studies, I heard the Spanish professor Juan Díez-Nicolás talk about the current situation of young and elderly people at the Spanish labor market. So much interesting information was presented, reflecting the legislative and cultural specifics of Spain, that I decided to share it with you by means of the below interview.

The Spanish retirement law is somewhat restrictive – forcing people of a certain age who work in certain sectors to retire. Can you tell us more about this phenomenon and its roots and why it is problematic?

In the 19th century, when the first law about retirement was introduced in Spain, it was considered a great social conquest and it really was, because it provided economic protection for workers and it allowed them to stop working at an age far beyond life expectancy at the time. Still in the 20th century, retirement age was established at 65 when life expectancy was around 60, which means that only a minority of workers really enjoyed having a retirement pension, because most likely they would have died before retirement. At present, life expectancy is about 80 years, which is 15 years after usual retirement age. And I say “usual” because in the private sector, retirement age is established in collective agreements signed between labor unions and entrepreneurs, so that in some sectors of the economy retirement is established at an earlier age.

In the public sector, retirement age is established at 70 years, but most public employees have to ask to continue working after they are 65. For the past five years, however, the public administration has been following a very erratic policy. On the one hand, it has tried to stimulate workers in the private sector to continue working by providing different economic stimuli to those who do not retire, but this possibility has not been given to employees in the public sector. On the other hand, the Government favors and stimulates early retirement both in the public and the private sector, subsidizing private firms by having the public Social Security take charge of part of the cost of early retirement. Therefore, employees in the public sector suffer double discrimination, one which is common to all. That is, having compulsory retirement at a certain age and not having the possibility that workers in the private sector have, which is to continue working beyond the age of retirement and with some economic premium.

The present legal regulations establish that in order to get any retirement pension, one must have contributed to Social Security for a minimum of 15 years (apart, of course, there is a social pension given by the Government to those who have never contributed to Social Security for whatever reasons). And in order to get 100% of your pension, you must have contributed for 35 years (and the Government is studying incrementing it to 40 years progressively) and up until the legal age of retirement. For any year not contributed, the pension is reduced by 8%. Thus, a person who retires at 60, five years before retirement age, will have his/her pension reduced by 40%.

What is being done in contemporary Spain to challenge this situation?

Different surveys have demonstrated that public opinion at large and experts in particular agree on the need to eliminate compulsory retirement at any age. Certainly many of those who oppose retirement at a certain age would like to retire earlier, but there is a growing minority of those who want to continue working after retirement age, mainly in professional service occupations, public administration, etc. It is not that a majority opinion wants to postpone retirement age, it is that the great majority of the population reject any age of compulsory retirement, because they want to decide themselves when they want to retire. More and more voices, and certainly social platforms, are demanding the right to retire at the age one decides. Of course, those who demand such right also accept that the retirement pension should be proportional to the amounts contributed to Social Security. The main obstacle to free decision regarding retirement comes from the labor unions who want the aged to retire in order to create jobs for the young.

What is the attitude of Spanish employers towards people of the 50+ generation?

The opinions of both experts and employment firms, as reported in the survey conducted by CEOMA (Madrid, Spain), employers favor early retirement of workers of 50 and more years (sometimes they not only favor, but force!). The reasons they give for their rejection of 50+ workers is that they are very expensive (they have high salaries) because, due to agreements with the labor unions, salaries in Spain are linked more to seniority (time in the job) than to productivity. Employers certainly value experience, but they reject the cost of older workers.

I have a feeling, however, that the young generation of Spaniards is not in an easy position either at the Spanish labor market. Is this true?

The situation can be summarized as follows. Only a few decades ago, Spaniards entered the labor market at about 20 years of age and they worked, with almost no periods of unemployment, until the age of 60, thus contributing to Social Security for a period of 40 years when life expectancy was 60-65 years. At present, youngsters enter the labor market at 30 or even 35 and at 55, one out of two will be either in long term unemployment or in early retirement, so that they will have contributed to Social Security for only 20 years when life expectancy is 80 years. It is true that youngsters are more and more considered young until they are 30 or 35 (and even later), because of high unemployment (unemployment rate among the young is 40%), and they survive thanks to their being supported by parents. Therefore, youngsters remain at their parents’ home until the age of 30 or 35 and many will even return after a marriage ending in divorce.

M.A. and Ph.D. in Political Science, U. Complutense, Madrid, and M.A. in Sociology, U. of Michigan, Ann Arbor. He obtained a chair in Sociology at the U. of Malaga in 1971, but since 1975 has held a chair at the U. Complutense in Madrid. He was co-founder of the Instituto de la Opinión Pública in 1963 and founder-Director General of the Centro de Investigaciones Sociológicas (CIS) in 1977. Between 1973 and 1982 he participated actively in the political transition to democracy, holding several public offices in the Governments of Adolfo Suárez. At present he is PI for Spain in several international comparative social research projects (WVS, ISSP, CSES and others), member of the European Academy of Sciences and Arts and President of ASEP, etc. He has published widely in demography, immigration, public opinion, social values.