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A second chance for IPREM?: Jobless benefits shrink from inflation and lose purchasing power

Parliamentary processing of the General State Budget paves the way to replace the public accounts presented by the coalition government, for which many groups will submit demands and recommendations. Unions emphasize the need for changes introduced by political groups to further raise IPREM, a key indicator of affordability and the amount of many benefits and subsidies, such as unemployment. The executive is targeting a 3.6% increase, well below inflation, for which the CCOO and UGT are demanding a bigger increase deal during congressional debates.

Budgets for 2023 are marked by rising inflation taking a toll on many households and warnings of “curves” in the economy. The coalition government has defended income protection for the “most vulnerable” with measures such as revaluing all pensions, including non-contributory ones, in line with average inflation for the year so they do not lose purchasing power. This figure is estimated at 8.5%, although this figure will be officially known in December when the November CPI data is released.

The Minimum Living Income (IMV), the government’s minimum income for households with very low resources, will also increase with prices. In principle, this is 8.5%, so that families can maintain their purchasing power. Already recognized IMVs have been revalued, but the thresholds for access to aid have also been increased by this proportion, representing a significant leap.

Labor also highlighted that cuts to unemployment benefits agreed by Mariano Rajoy’s government after six months of collections had been scrapped. Thus, after 180 days, its amount will go from 70% of the regulatory base (similar to salary) to 60%, instead of the 50% set by the PP.

Unions worry that this “income guarantee” policy has failed to achieve the IPREM (Public Income Indicator with Multiplier Effect), which affects a large population with limited resources and vulnerable to price crises. The budget is expected to reach €600 in 2023 from the current €579.02 per month, an increase of 3.6%.

The increase will also be lower than next year’s minimum wage (SMI) increase, which, while not yet known, is expected to be higher than that figure. Thus, the gap between SMI and IPREM will widen further.

The CCOO is proposing an increase to €665.29 a month in 2023, an increase of almost 15%, which “guarantees the maintenance of the purchasing power with which it originally started,” according to an amendment proposal prepared by the union.

Its general secretary at the UGT, Pepe Alvarez, explained a few days ago that the union is asking for an increase, which “in no case can be less than the cost of living”, inflation. “Of course, we will have to add a progressive part to recover the lost purchasing power,” added Alvarez, which has been up more than 14% since inception in 2004.

The Department of Labor, in its budget presentation to Congress, highlighted IPREM’s growth in the legislature by more than 11% so far. After spending a decade virtually frozen, the Coalition Executive has agreed to a historic 5% increase in 2021, up from 2.5% last year, and the aforementioned 3.6% increase this year.

IPREM is very relevant for two reasons. On the one hand, because it determines the amount of subsidies, such as unemployment and the unemployed over the age of 52. These account for 80% of IPREM, so they will increase from the current €463 to €480 per month in 2023. That is, their growth directly affects the income of about “one million people”, as estimated by the secretary. Employment State, Joaquin Perez Rey.

IPREM also sets a minimum and maximum amount of unemployment benefit, which also takes into account the household’s situation, whether or not there are dependent children. The CCOO believes that “a certain bankruptcy in the social protection model” is created by guaranteeing the purchasing power of people on social assistance such as non-contributory pensions and “worsening the situation of those who have previously contributed”.

On the other hand, this indicator indicates access to many social assistances. For example, public housing rentals, book grants, free justice or a regional minimum income such as Andalusian.

The fact that IPREM is not growing as it has over the past decade, or that it is making less than the minimum wage and other benefits, means that the threshold for accessing these benefits is becoming more demanding. In other words, they become unaffordable for people with low incomes, but not as low as IPREM.

The Association of Lawyers for a Dignified Office Shift (ALTODO) warned about this in a recent statement, which considers the growth of IPREM insufficient. The organization argued that the growing gap between the minimum wage and IPREM was a “real barrier to access to the right that was previously enjoyed”.

Faced with this gap, which is widening every year and if the budget is maintained, it will happen in 2023 as well, ALTODO requests that the right of free justice restore the SMI as a reference for the admission threshold.

Source: El Diario





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