Spain’s Shocking Demographics


 
An unsustainable tax burden is unfolding in Spain. As the working-age population of Spain continues to shrink (due to the fast-falling fertility rate over recent decades), there are a decreasing number of workers able to support the growing numbers of retirees, as the elderly live increasingly longer. The working-age population is expected to fall 13.5% from now to 2050 to 52% of the total population - the third largest decline in that period globally. In 1950, Spain had 9 workers supporting each retiree, in addition to regular Government taxes. By 2050, there will only be 1.5 workers to each retiree. This is an increasingly unsustainable – and unprecedented – generational tax burden on the working population of Spain.

Number of Workers to each Dependent (65+) in Spain and across the EU
The working-age population represents those aged 15 to 64. Period: 1950-2050.
Spain’s Shocking Demographics




Note: The EU average is calculated by summing the number of workers to dependents in each EU country and then dividing by the total number of countries (27).


Although this is a problem for many developed European nations, Spain has been in the vanguard of this disastrous demographic trend. As can be seen in the chart above, Spain’s ratio has now slipped below the EU’s average. This is not helped by the fact Spain already has the second highest life expectancy in the EU.

To counter this trend, Spain is gradually raising the retirement age to 67 by 2027. But it is unclear whether this will be enough to ease the cost burden on the Spanish taxpayer. This is because retirees cost Governments the most out of any age demographic due to expensive pensions and medical and care provisions. Estimates suggest that retirees cost the Government three times that of working-age people in terms of annual spending. Unless Spain’s unpopular intervention to raise the retirement age reverses this trend, the declining number of taxpayers available to support the rising number of expensive-to-maintain, non-working retirees will mean the tax burden on the Spanish working population could soon become unbearable.

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