The European Commission has placed Spain at the lower end of its social indicators ranking, focusing on major challenges such as high poverty rates, particularly among children, income inequality, limited effectiveness of social benefits, housing access issues, and elevated unemployment.

These findings are part of a detailed analysis commissioned by Vice President Yolanda Díaz.

In its latest report, the Commission noted that in 2023, the child poverty rate increased by 2.3 percentage points to 34.5%, with a poverty gap of 31.6%.

These figures significantly exceeded the EU averages of 24.8% and 24.4%, respectively.

The situation worsened further in 2024, with child poverty climbing to 34.6% and the poverty gap rising to 32%.

Child poverty in Spain is closely linked to employment conditions and income levels of parents.

The report highlighted the limited efficacy of tax measures and child benefits, which stand at €428 per capita compared to the EU average of €878.

Among children from migrant backgrounds, particularly those born outside the EU, the risk of poverty is further exacerbated by high parental unemployment rates and overrepresentation in low-wage sectors.

Roma children also face critical challenges, with 98% living in poverty.

Single-parent households, especially those led by single mothers, and households with elderly members are more likely to experience child poverty.

The report indicates significant regional disparities across Spain, with child poverty rates ranging from 16.8% in Cantabria to 49.3% in Melilla.

The economic burden of child poverty on public finances is estimated between 4.1% and 5.1% of GDP. The report emphasizes the long-term implications of child poverty on educational achievement and future job prospects, perpetuating social and economic disadvantages.

In addition to child poverty, 26.5% of the overall population was at risk of poverty or social exclusion in 2023, a figure notably higher than the EU average of 21.3%.

This percentage slightly decreased to 25.8% in 2024. Vulnerable groups identified include single parents, households with three or more children, individuals with disabilities, and the Roma population.

The report identifies seven territories in Spain where the at-risk population exceeds 30%, including regions like Andalusia, the Canary Islands, and Extremadura.

To address these issues, the report called on the Spanish government to make significant efforts to achieve its national target of reducing the poverty rate by 2.8 million people by 2030, including 700,000 children.

The social protection system in Spain continues to face substantial challenges regarding effectiveness and coverage, with a deterioration in the impact of social transfers on poverty reduction, falling to 22.9% in 2023, compared to 34.7% in the EU, before stabilizing in 2024 at 23.9%.

Social transfers have been particularly ineffective in alleviating child poverty risks, with effectiveness recorded at 17%, in comparison to the EU’s 41.4%, although this did rise to 20.2% in 2024. The report also noted that take-up rates for the Minimum Living Income and the Child Benefit Supplement remain low, with 56% and 73% of potentially eligible households, respectively, not applying due to administrative barriers or lack of awareness.

Income inequality and working poverty are persistent challenges in Spain.

In 2023, the income of the richest 20% of the population was 5.5 times higher than that of the lowest 20%, marking one of the highest disparities in the EU, where the average ratio is 4.72. However, this ratio has improved from a peak of 6.67 in 2015 to 5.4 in 2024, approaching the EU average.

The redistributive effect of taxes and transfers remains low at 39%, as opposed to the EU average of 49%.

Working poverty affected 11.3% of workers in 2023, three points above the EU average, and remained stable in 2024, driven by low wages and precarious employment conditions.

The report recognizes the positive impact of minimum wage increases—totaling a 54% rise since 2019—on poverty and income inequality, particularly benefiting low-income households, youth, women, and low-skill workers.

Housing accessibility and energy poverty present growing challenges in Spain, with nearly one-third of those at risk of poverty (29.9%) facing high housing costs in 2024, compared to only 2.4% of those not living in poverty.

The social rental housing stock in Spain remains among the lowest in Europe at 3.3%, compared to the EU average of 8% in 2024. The rising costs of housing, especially in urban areas like Barcelona and Madrid, impede labor mobility and exacerbate intergenerational poverty.

Young adults are notably impacted, with 30.3% of those under 34 still living with their parents.

Energy poverty also worsened in 2023, with 20.8% of households unable to adequately heat their homes, nearly double the EU average of 10.6%, but this improved to 17.5% in 2024.

In the realm of education, the report emphasizes high rates of early school leaving and educational inequalities that hinder the integration of youth into the labor market.

Despite a decline in the early school leaving rate from 31.7% in 2008 to 13.7% in 2023, it remains above the EU average of 9.5% and the target set for Spain by 2030 of 9%.

Despite labor demand, enrollment in advanced vocational training remains low at 39.1%, compared to 49.1% in the EU, and Spain experiences one of the highest rates of overqualification in the EU, with over one-third of workers possessing qualifications exceeding job requirements, contrasting with 21.9% in the EU. Additionally, 43% of workers are employed in fields unrelated to their studies, representing the largest relative mismatch between job supply and demand in the EU, hampering productivity and income prospects.

Simultaneously, Spain faces a shortage of highly qualified workers in green, digital, and health sectors while depending on migrant labor for low-skill jobs in domestic work, construction, commerce, and hospitality, which undermines productivity and competitiveness.

Employment rates have shown steady improvement, reaching 71.4% in 2024, yet remain below the EU average of 75.8%.

With an unemployment rate of 11.4% in 2024, Spain continues to have the highest unemployment in Europe; long-term unemployment is at 3.8%, doubling the EU average.

The report notes that much of the employment growth appears to be due to labor force expansion rather than the reintegration of the unemployed, while youth unemployment has decreased to 26.5% in 2024, still significantly above the EU average of 14.9%.

This comprehensive report by the European Commission was compiled following the identification in December of negative outcomes for Spain across 10 out of 17 risk indicators in its ranking.

Other EU member states examined in this second phase include Italy, Greece, Croatia, Bulgaria, Estonia, Lithuania, Hungary, Romania, and Luxembourg.