Vulnerable groups: can the Spanish social security system guarantee their protection in times of corona? Financial implications for the welfare state

Vulnerable groups: can the Spanish social security system guarantee their protection in times of corona? Financial implications for the welfare state Cristina S ÁNCHEZ -R ODAS N AVARRO * 1. Introduction 1 The COVID pandemic has caused human tragedy, including illness and death, pushed hospitals and bed capacity to the limits, changed our family life and social interactions, and caused a worldwide economic crisis, 2 in addition to many other undesirable and adverse effects. The pandemic has also produced a boom in teleworking, at least in those activities where its implementation is feasible. This notwithstanding, a significant increase in Spain’s unemployment rate has not been prevented. The year 2020 ended in Spain with a decrease of 360,105 (-1.8 per cent) contributors to the social security system, the largest annual decline since 2012. The economic crisis resulting from the paralysis of productive activity owing to the pandemic has undoubtedly affected those segments of the population the most who are at risk, namely people working in the informal economy and job seekers. The pandemic has also dramatically increased the number of those whose income lies below the poverty line. This paper focuses on the legislative reforms devised in Spain in the wake of the pandemic to respond to the needs of two particularly vulnerable groups: the unemployed 3 and people at risk of social exclusion. * University of Sevilla, Spain. 1. Research carried out within the scope of the projects financed by MINECO “La Seguridad Social Internacional y Comunitaria: conflictos de leyes y protección Social” (DER2017-83040-C4-3-R) and Red de Excelencia “La Protección Social y la Coordinación de Sistemas de Seguridad Social en la Unión Europea e Iberoamérica: Los desafíos del Brexit y el pilar Europeo de Derechos Sociales (RED2018-102508-T). 2. Yue Lin; “China’s Social Security system and labor protection under the Covid-19 pandemic”. E-Revista Internacional de la Protección Social” No. 1/2020; pp. 15-28. 3. José Antonio González Martínez;“Medidas excepcionales en materia de Seguridad Social durante el COVID-19”. E-Revista Internacional de la Protección Social No. 1/2020; pp. 136-175. Cristina S Á NCHEZ -R ODAS N AVARRO 126 2. Covid and unemployment The most important legal instrument supporting employment stability and preventing mass dismissals is the “employment regulation procedure” 4 , which allows suspensions of contracts and reductions in working hours, with the peculiarity that employers are exempt from paying social security contributions for their workers, 5 including the unemployment contribution rate. In case of reductions in working hours, social security contributions are only due for services actually performed by employees. On account of these measures, companies have been able to mitigate the pandemic’s economic impact. As an extraordinary measure, Article 35 of Royal Decree Law 11/2020 provides for the possibility to request deferments of social security debt under exceptional conditions. In accordance with the current legislation, workers who are covered by these “employment regulation procedures” are entitled to contributory unemployment benefits, even if they do not fulfil the eligibility criteria for the minimum period of contributory employment. Furthermore, the unemployment benefit amounts received during this period will not be counted for the purpose of calculating the employee’s maximum benefit amount. During the period of applicability of the extraordinary public health measures adopted by the authorities to fight COVID-19, applications for unemployment compensation beyond the maximum benefit amount outside the legally prescribed period will not result in the reduction of the entitlement period for the corresponding benefit. The total number of unemployed persons in December 2020 was 3,888,137 persons, of which nearly two million were women. In Spain, which has always had one of the highest youth jobless rates in the EU, unemployment among young people under the age of 25 years increased by 47.1 per cent in 2020, compared to 20.8 per cent unemployment among persons aged 25 years and up. It should be noted that workers covered by the “employment regulation procedures” (approximately 755,000 persons on 31 December 2020) are not included in the unemployment figures. Nor does the government 4. Expediente de regulación de empleo: ERTE. 5. Enterprises with less than 50 employees are entitled to a bonus of 100 per cent of social contributions and 75 per cent if the number of employees exceeds this threshold. Vulnerable groups: can the Spanish social security system guarantee their … 127 include the self-employed who are receiving benefits for cessation of activity. If all of these individuals were added, Spain’s actual unemployment rate would exceed 30 per cent. 3. Unemployment measures to fight the covid pandemic In accordance with Spanish legislation, unemployment compensation includes a cash benefit for full or partial unemployment and payment by the Public Employment Services of the employer’s social security contributions. Since the government announced the state of emergency on 14 March 2020, a battery of legal measures has been enacted to fight unemployment caused by the COVID-19 health crisis. These measures are regulated in Royal Decree Law 8/2020, Royal Decree Law 11/2020, Royal Decree Law 17/2020, Royal Decree Law 24/2020 and Royal Decree Law 30/2020. These provisions were exclusively promulgated by the government –not by Parliament– on the basis of Article 86 of the Spanish Constitution, which stipulates that “in cases of extraordinary and urgent need, the Government may issue temporary legislative provisions…”. 6 The objectives and features of the new unemployment provisions are as follows:  to stabilise employment and prevent the destruction of jobs;  temporary validity, depending on the development of the pandemic;  duration of receipt of cash benefits will not be reduced in case of late submission of application;  unemployment benefits have been extended to workers whose contracts were terminated during their probation period after 9 6. Article 86.1 Spanish Constitution:“…in cases of extraordinary and urgent need, the Government may issue temporary legislative provisions which shall take the form of decree-laws and which may not affect the regulation of the basic State institutions, the rights, duties and liberties contained in Title 1, the system of the Autonomous Communities, or the General Electoral Law. 2. The decree-laws must be submitted forthwith to the Congress of Deputies, which must be summoned for this purpose if not already in session. They must be debated and voted upon in their entirety within thirty days after their promulgation. Congress must expressly declare itself in favour of ratification or repeal within said period of time, for which purpose the Standing Orders shall establish a special summary procedure. 3. During the period established in the foregoing clause, their passage through the Cortes may be the same as for Government bills, by means of the emergency procedure”. Cristina S Á NCHEZ -R ODAS N AVARRO 128 March 2020, regardless of the reason for the termination, as well as to those workers who voluntarily terminated their employment contract after 1 March 2020, because they had a firm job offer with another company that ultimately did not enter into the contract due to the COVID-19 crisis. The extensive legislation adopted since the state of emergency was declared has resulted in around 30 different unemployment benefit schemes. Yet nearly 1.3 million unemployed persons are not covered by them. Legislative diffusion has made the system far too complex. Moreover, the Spanish administration does not have sufficient human resources to process the many submissions received, and many applicants have had to wait months to receive help. 3.1. Special contributory unemployment benefits introduced due to the current extraordinary circumstances 3.1.1. Measures for unemployed workers whose contracts have been suspended or whose working hours have been temporarily reduced  Recognition of the right to contributory unemployment benefits, even if the worker has not yet accumulated the required minimum contribution period;  the (temporary) period during which unemployment compensations is received due to the extraordinary circumstances caused by the pandemic will not be included for the purposes of calculating the worker’s maximum duration of unemployment insurance;  the cash benefit amount shall replace 70 per cent of the employee’s average wages 7 earned during his or her last 180 days of contributions or during the period immediately prior to the situation of unemployment;  the duration of the benefit shall be extended until the end of the period of suspension of the employment contract or the temporary reduction of working hours. 7. The “regulatory base” for unemployment compensation is used to calculate the total amount of this benefit, while the State Public Employment Service uses the “contingency contribution base” to determine the payment of contributions during the period of unemployment compensation. Vulnerable groups: can the Spanish social security system guarantee their … 129 3.1.2. Intermittent permanent workers If the worker’s activity has been suspended and he or she has over 360 days of contributions, he or she is entitled to unemployment compensation. If the worker becomes involuntarily unemployed again and re-applies for unemployment benefits, he or she will be put back on the payroll for a maximum of 90 days. If the worker’s activity has been suspended or if he or she has not been able to return to work and has not accumulated the required minimum contribution period, the worker is entitled to a contributory benefit that will be paid until the worker can return to work (for a maximum of 90 days). The current period of extraordinary measures does not imply a reduction in future eligibility for the corresponding unemployment benefits. 3.1.3. Extraordinary contributory unemployment benefit for bullfighting professionals who are not entitled to other unemployment benefits Bullfighting professionals who apply are eligible for the extraordinary contributory unemployment benefit, provided that they do not have access to ordinary unemployment benefits. Those workers included in the census referred to in Article 13.2.a) of Royal Decree Law 2621/1986 on 31 December 2019 are eligible beneficiaries. Entitlement to this subsidy was established on 6 November 2020, provided that the application was submitted before the deadline. If the application was submitted after the deadline, entitlement to the benefit commenced on the day following submission of the application. Entitlement to the unemployment benefit regulated in this article shall cease on 31 January 2021. The termination of this benefit does not, however, denote an exhaustion of contributory unemployment benefits as regulated in the consolidated text of the General Law on Social Security. To determine the benefit amount, the applicable minimum contribution base for common contingencies is used as the regulatory base, corresponding to Group 7 of the professional categories of the general social security system. Cristina S Á NCHEZ -R ODAS N AVARRO 130 3.2. Extraordinary measures for unemployment assistance 3.2.1. Exceptional unemployment allowance for domestic employees Persons integrated in the special system for domestic employees within the general social security system can benefit from this exceptional unemployment subsidy in case of suspension or reduction of activity. Requirements: registration with the social security system prior to the entry into force of Royal Decree Law 463/2020 declaring the state of emergency in response to COVID-19, and being in one of two situations:  temporary cessation of the provision of services in one or more homes, in full or in part, through no fault of their own, as a result of the COVID-19 health crisis to reduce the risk of contagion;  their employment contract has ended for reasons beyond the worker’s control as a result of the COVID-19 health crisis. In both situations, the causal events must have occurred after 14 March 2020, the date Royal Decree Law 463/2020 came into force. 3.2.2. Extraordinary subsidy for public performance artists within the general social security scheme As a result of the health crisis caused by COVID-19, public performance artists, who are entitled to extraordinary unemployment benefits in accordance with Article 2 of Royal Decree Law 17/2020 of 5 May – which approved measures to support the cultural sector and provide tax relief to deal with the economic and social impact of COVID-19 – continue to be entitled to this unemployment benefit. As an exceptional and temporary measure, protection for this particular group during periods of inactivity comprises unemployment compensation in addition to benefits for child birth and child care, retirement, permanent disability and death, covered by common contingencies. 3.2.3. Exceptional unemployment benefit for technical and support staff in the cultural sector Beneficiaries: workers who temporarily worked as technical or support staff in the cultural sector, providing services for public performance or show productions. Among other requirements, the worker must: Vulnerable groups: can the Spanish social security system guarantee their … 131  be registered as a job seeker with the Public Employment Services on the date of application for the exceptional benefit and sign the activity commitment;  not be in full-time employment or self-employment on the date of application for the benefit or on the date of entitlement to the exceptional benefit;  not have been the beneficiary of any other extraordinary protection measures against unemployment approved following the outbreak of the health crisis caused by COVID-19;  have proof of a period of employment and of having contributed to the general social security scheme for at least 35 days. 3.2.4. Exceptional unemployment benefit when the temporary contract ends The beneficiary must meet the following requirements:  he or she must be registered as a job seeker with the Public Employment Services and sign the activity commitment;  he or she is not entitled to any other unemployment benefit or subsidy because he or she has not accumulated the required minimum contribution period. Beneficiaries:  workers with a fixed-term contract that lasted at least two months are eligible for this benefit, provided that their contract ended after 14 March 2020;  workers whose activity involuntarily ceased after 15 March 2020 and who have been employed under a fixed-term contract for at least two months, with the obligation to pay unemployment insurance;  workers whose income does not exceed 75 per cent of the minimum interprofessional wage, excluding the proportional part of two special payments;  workers who do not earn the minimum income, the inclusion income, social wages or similar aid provided by any public administration;  workers who were not working full time or were self-employed on the date of termination of the contract or on the date the exceptional benefit was introduced. After 21 July 2020, it was no longer possible to apply for the Exceptional End of Contract Grant. Cristina S Á NCHEZ -R ODAS N AVARRO 132 3.2.5. Exceptional subsidy for unemployed persons who have exhausted state aid between 14 March and 30 June Beneficiaries: unemployed workers who have exhausted their entitlement to contributory benefits between 14 March 2020 and 30 June 2020, and are not entitled to any other subsidy. Workers who have exhausted their entitlement to any of the following benefits between 14 March 2020 and 30 June 2020 are eligible for the exceptional subsidy:  unemployment compensation in any of its modalities regulated in Chapter III of Title III of the revised text of the General Law on Social Security;  extraordinary unemployment benefit (SED);  insufficient contribution allowance;  active insertion rent. The duration of the exceptional benefit is limited to 90 days and can only be claimed once. The subsidy amount is equal to 80 per cent of the applicable public indicator of multiple effects income, and is paid out by the Public Employment Services from the month following submission of the application. 4. COVID-19 and self-employed workers Self-employed persons have been entitled to ordinary protection in case of cessation of activity (“unemployment for the self-employed”) since 2010. 8 This protection is provided for self-employed persons who are in a legal situation of cessation of activity. This implies full cessation of the selfemployed person’s economic or professional activity and may be definitive or temporary. Such protection includes the payment of a monthly financial benefit and social security contributions for common contingencies. As a consequence of the pandemic, new supplementary benefits have been introduced on a provisional and transitory legal basis to protect unemployed workers. The Spanish social security system has paid out EUR 289.73 million in benefits to over 355,000 self-employed workers to support them in the wake of COVID-19. 8. Cristina Sánchez-Rodas Navarro; “Good Legal Practices in Spanish Law? Clauses governing residence and the export of Spanish Social Security benefits” in: M.T. Velasco Portro (Coord.); Good Practices in Social Law. Laborum. 2015; pp. 23-45. Vulnerable groups: can the Spanish social security system guarantee their … 133 4.1. Extraordinary protection in case of cessation of activity The beneficiaries of this allowance are all self-employed persons who have been impacted by the closure of businesses as a result of the declaration of the state of emergency or whose monthly revenue has decreased by 75 per cent compared to their monthly average in previous quarters. Unlike the ordinary benefit provided in case of cessation of activity, a contribution period of 12 months is not required to be eligible for this particular benefit. Requirements:  the self-employed person must have been affiliated and registered with the social security system on the date of the declaration of the state of emergency (14 March 2020), either under the Self-Emp- loyed Scheme or, where applicable, under the Special Scheme for Sea Workers;  in the event the self-employed person’s activity has not been suspended as a result of the state of emergency, he or she must prove a loss in revenue of at least 75 per cent in the calendar month prior to the application for the benefit compared to his or her average revenue in the quarters prior to the declaration of the state of emergency;  the self-employed person must have paid the mandatory social security taxes. If this requirement has not been fulfilled on the date of the suspension of activity or loss in revenue, the administrative body will request the applicant to pay the outstanding amount within a non-renewable period of 30 calendar days in order to be eligible for the benefit. Once the outstanding amount has been paid in full, the self-employed person acquires the right to protection. The amount will be 70 per cent of the regular base income, calculated the same way as the ordinary benefit in case of cessation of activity. The beneficiaries are exempt from paying social security contributions. 4.2. Extraordinary low-income benefit This benefit is targeted at self-employed persons who are not entitled to protection in case of cessation of activity. Requirements: the self-employed worker may not have earned an income from self-employment in the last quarter of the financial year 2020