Spain has the highest poverty and exclusion rates in Europe, a position it has held since 2021. Previously ranked sixth in 2018, the country now faces significant economic and social challenges, exacerbated by its position at the top of the European Misery Index.
The Misery Index, developed by American economist Arthur Okun, combines unemployment and inflation rates to measure a country’s economic hardship. Unlike GDP, which can be skewed by government spending, the index highlights real-world economic struggles, such as high unemployment and inflation, that directly affect citizens.
Spain’s standing in the Misery Index
As of December 2024, Spain leads the European Union and Eurozone with a Misery Index score of 14.7%. This figure reflects rising unemployment and inflation, surpassing other nations such as Slovenia, the Czech Republic, and Greece.
While some argue Spain has historically maintained these levels, data reveals otherwise. For example, Greece has significantly reduced its score, while Spain has climbed to this unenviable position since 2021.
Social factors and poverty rates
Spain’s at-risk-of-poverty and exclusion rate rose from 25.3% in 2018 to 26.5% in 2023, according to Eurostat. This places Spain third in Europe, behind only Romania and Bulgaria.
Additionally, 9% of Spain’s population cannot afford a standard of living, up from 5.4% in 2018. GDP per capita, adjusted for purchasing power, has also declined. Spain now lags 9% behind the EU average, a widening gap since 2017.
Debt and unemployment
Debt is another significant issue for Spain, with government debt standing at 104.4% of GDP and total liabilities reaching 135% of GDP. This is one of the highest debt levels in the EU.
Unemployment remains a persistent problem. Spain has the highest official unemployment rate in the EU and OECD, alongside leading in “unused work” — a measure that includes latent unemployment and unregistered job seekers.
Tax burden and economic structure
Spain’s tax burden is disproportionately high compared to the EU average, especially given its smaller businesses, higher unemployment, and larger underground economy. The ratio of tax revenue to GDP fails to account for these factors, placing additional strain on the economy and its citizens.
Addressing the challenges
Spain’s position as a leader in poverty and economic hardship highlights the need for comprehensive reform. Addressing unemployment, reducing inflation, and managing debt are critical steps toward reversing these trends. Policymakers must also consider social safety nets to combat rising poverty and exclusion rates.
Spain’s current economic and social standing underscores the urgency of structural change, not only to improve its rankings but also to enhance the quality of life for its citizens.
Also read: Almost half of property renters in Spain face severe poverty after paying rent