MADRID – In Spain, as in most other Western European countries, income inequality is high. In Spain, 57.6% of wealth is concentrated in the richest 10% of the population; the 1% of the very rich together, even own almost a quarter of the wealth.
This wealth gap is smaller than in countries such as Germany and Portugal, but larger than in France or Italy. According to researcher Clara Martínez Toledano of World Inequality Lab, the Spanish government’s “redistributive capacity” is insufficient to narrow the gap between rich and poor.
Inequality is still greatest in countries in Africa, Latin America, and Asia. At a European level, Spain is in the middle when it comes to the distribution of income and wealth. However, inequality here, as in the rest of the world, is increasing.
National wealth in 2008
The 2008 real estate bubble made Spain one of the countries with the largest wealth accumulation, albeit fictitious. The skyrocketing house prices meant that private wealth was 800% of national income that year. This means if all labour productivity were to be stopped, the country could still live on this private wealth for another 8 years. By comparison, in 2008 total private wealth in France and England was around 535% of national income. And in America, it was 472%.
Nevertheless, wealth accumulation in Spain in 2008 did not lead to greater inequality. This was because the majority of the social middle class owned their own house and to a much lesser extent financial investments. The exceptional price increase, therefore, had a moderate effect, says researcher Luis Bauluz of World Inequality.
Wealth at the expense of the social middle class
With the bursting of the real estate bubble, this panorama changed, the level of wealth in Spain declined and wealth increasingly concentrated in the hands of the richest upper class. So now it owns 57.6% of the national wealth, compared to 56.5% in 2018. This has been at the expense of the poorest 50%, especially the social middle class, which has fallen from 36.9% to 35.8%.
Martínez Toledano explains that the increased inequality can be partly explained by income from capital, and that this wealth is not equalised by holes in the current tax system. For example, the reforms of the wealth tax have meant that only less than 1% of the population has actually paid this tax. In fact, a number of autonomous regions, including Madrid, have not collected any wealth tax at all.