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GEOGRAPHY AND HISTORY DEPARTMENT Teacher: Maite Fresnillo UNIT 10: POPULATION IN SPAIN AND THE BASQUE COUNTRY. DYNAMICS AND STRUCTURE Population Geography analyses the inhabitants and their relation to the space, but the science in charge of analysing population is demography. At the beginning of the 20 th century Spain had about 17.8 million inhabitants but, by the end of the century it counted with 39 million and its birth rate was one of the lowest in the world. Economic evolution has played a main role in this evolution. 1. Sources for demographic analysis During different historical periods, the sources for demographic analysis were not very accurate. The main ones were: · Census: inquiries done every 5 or 10 years · Fire accounts A majority of them had a fiscal purpose so they can not be taken seriously because the information given was not always reliable. Among the most famous census are those of Aranda (1768) and Floridablanca (1787). In the last one the number of inhabitants exceeded 10 millions. The first census with modern statistic criteria was made in 1857 and it was known as Censo de la Población de España. Given that Spain is divided into autonomous communities, the realization of the census depends on each autonomous government and in this way they have been realised since 1981 and 1991. Other sources for demographic information were church registers where information about 1

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Page 1: Unit 10

GEOGRAPHY AND HISTORY DEPARTMENT

Teacher: Maite Fresnillo

UNIT 10: POPULATION IN SPAIN AND THE BASQUE COUNTRY. DYNAMICS AND STRUCTURE

Population Geography analyses the inhabitants and their relation to the space, but the science in charge of analysing population is demography.

At the beginning of the 20th century Spain had about 17.8 million inhabitants but, by the end of the century it counted with 39 million and its birth rate was one of the lowest in the world. Economic evolution has played a main role in this evolution.

1. Sources for demographic analysis

During different historical periods, the sources for demographic analysis were not very accurate. The main ones were:

· Census: inquiries done every 5 or 10 years· Fire accounts

A majority of them had a fiscal purpose so they can not be taken seriously because the information given was not always reliable. Among the most famous census are those of Aranda (1768) and Floridablanca (1787). In the last one the number of inhabitants exceeded 10 millions. The first census with modern statistic criteria was made in 1857 and it was known as Censo de la Población de España.

Given that Spain is divided into autonomous communities, the realization of the census depends on each autonomous government and in this way they have been realised since 1981 and 1991.

Other sources for demographic information were church registers where information about births, deaths and

marriages was collected in different books. The first of them date back to 1563.

Nowadays we can count on the following sources:- civil registers- property registers- parish registers- census- local registers- world level registers: UN, UNESCO, FAO- information collected by other public institutions

In Spain census are done every 10 years since 1900 and they are actualised every 5 years with local registers. In these census there is a distinction between seasonal

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population, this is, the inhabitants living in a town in the moment in which the roll is done, and the registered population, this is, the full amount of population even if they are not present in the moment of doing the roll.

2. Historical evolution of the population in Spain and the Basque Country

There are two main periods separated by a transition. The first period lasts until 19th

century and during that the population increase is slow and continuous, even if there are moments in which the increase is stopped or there is a decrease. This period is known as old demographic regime.

During the transition there is an evident decrease in the death rate, which has several ups and downs, while birth rate continuous being high.

The third period is known as modern demographic regime and in this the reduction of birth rate begins.

Old demographic regime

There is little information about the period but the fact that many towns and villages were founded (as in the Basque Country), indicates that there should have been an increase in population. This evolution was halted with the Black Death of 1348.

Anyway, after the crisis of the 14th and 15th centuries, 16th century bore witness to an important increase, characterised by high birth rate and high death rate, mainly children’s. At the end of this century corn was introduce in agriculture to assure the possibility of breeding all the population.

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DEMOGRAPHIC TRANSITION MODEL

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During 17th century there was a new decrease, mainly in Castile. At once with plagues many illnesses, an important emigration to America and the Thirty Years War caused demographic losses that accelerated the decrease.

18th was a century of recovery because food improved (potato and corn) and hygienic and medical advances were introduced. In addition to this, at the end of the century the vaccine against smallpox was found and with this epidemic illness started having a more limited impact. At the end of this century there was a crisis in agriculture that at once with the yellow fever imported from America and the exhaustion of the agricultural model ended up in a serious demographic crisis.

The exhaustion of the agricultural model ended in population getting older because given the poor results of harvest there was a delay in marriages with the consequent reduction of fertility and births.

Demographic transition

The main characteristic of this period is the important decrease of death rate while births continue being high and, as a consequence, there are moments of opposite phases. In general in Spain this transition started with a certain delay in comparison with other developed countries so that the transition began in the second half of 19 th

century and continued until the beginning of the 20th century.

During the 19th century population had a slow but maintained raise because the difference between death and birth rate was small. This is a period in which the graphic shows a serrated profile. Rates continued being higher in Spain than in other countries because even when catastrophes were reduced subsistence crisis continued being frequent.

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Emigration to America continued although the industrial take off. In addition to this, during this period there were some plagues, wars (Carlist War) and a lack of hygienic measures.

In the Basque Country the population increase was lower than that of Spain. The only element that changed during the period was children death rate that was reduced to a level of 10 per mile (it was 15 before).

To sum up we can say that the period of the 19th century was a continuation of the former period just with some small changes.

During the second half, on the contrary, the evolution was different depending on the regions. Whereas Biscay and Guipuzcoa experienced an important increase in which the main characteristics of the transition period developed, the rest of the regions were stagnated, what is more, some of them, as it is the case of Northern Basque Country, experienced a huge difference between coast and interior that continues even nowadays.

The reason for the emigration from the interior to the coast is due to several reasons among which there are subsistence crisis provoked by natural causes, inheritance system, customs removal to the coast and the possibility migrating to America.

Modern demographic regime

The characteristics of the period are the lower birth and death rates, the reduction of fecundity and the improvement of hygienic and medical services that had a dramatic effect on the reduction of death rates.

The change of century was marked by deep alterations in population structure and spatial changes, mainly those linked to industry and urban phenomenon that had a huge influence in geographical spaces.

The 1900 census gave for the Southern Basque Country a population a bit over 900,000 inhabitants and 17.8 millions for the Spanish state.

In the Basque Country the model for the new demographic regime was Biscay, where there was an important acceleration beginning in 1877, at once with the industrial development. The base of that increase was the immigration that resulted in big population concentrations around the Nervion-Ibaizabal, where a majority of the industries were located.

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The evolution in Guipuzcoa was a bit different because there was a bigger equilibrium in the immigrants’ distribution and with an increase that was not as quick as in Biscay.

The cases of Navarre and Alava were similar, with increases near to zero, but for the capital cities where a certain development was experienced. In these provinces there was the opposite process, with migrations of people to the coastal provinces to work in the new born industries.

3. Spain and Basque Country’s demographic development during the 20th century

The term normal or vegetative increase is that in which only births and deaths are taken into account. Vegetative increase rate is the percentage of the former difference taking into account the whole population of a country.

Births (alive) number- deaths numberVegetative increase rate= x 100 Population

There are three different levels in these rates:- Less than 1 per cent: it is considered to be low and it is characteristic of

developed countries.- Between 2 and 3 per cent belongs to developing countries- More than 3 per cent in the case of underdeveloped countries.

3.1. Birth rate

It is the number of children born in a period of time, normally it is calculated annually and it takes into account the number of births alive. It is measured in miles and it is compared with the total population:

Births in a yearBirth rate = x 1000

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Total population

There are three levels in relation to birth rates:

- High: 35 per mile or more- Medium: between 20 and 35 per

mile- Low: less than 20 per mile.

At the beginning of 20th century the media birth rate in Spain was 35 per mile; it was reduced to 30 per mile in the 1920s to increase to 25 per mile during the Civil War. Once the War was finished it recovered the lowest levels during the 1960s. Later on, during the 1980s, it became one of the lowest in the world, with a 10 per mile in Spain and 7-8 per mile in the Basque Country.

In the case of the Basque Country, there was a difference between coastal and interior provinces. In the former birth rate increased to reach levels of 47 or 35 per mile in industrial areas as a consequence of immigration.

After the Civil War and mainly after the 1950s, there was a huge increase in population that was known as baby boom. The reasons for it were the improvement of economic situation, the ban on anti-conceptive methods, women working only at home.

After 1978 the situation changed due to the industrial crisis. The birth rate level in the Basque Country became the lowest of Spain and interior regions, having low rates, were even over industrial regions.

Fertility rate became one of the lowest in the world, with levels of 1.2 children per fertile woman, what does not guarantee the generational shift. This situation is related to a new socio-economic model in which some of the characteristics are:

- economic crisis- high unemployment levels- expensive housing- women entering in labour market- generalization of the use of anti-conceptive methods- children leaving familiar home later- delay of marriages and age for having children.

3.2. Death rate

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It is the relation between the numbers of deaths in relation to the total population. It is calculated annually. There is also a infant death rate in which the coefficient relates the number of children who die during their first year with the total amount of births.

Number of deaths in a yearDeath rate = x 1000

Total population

There are three different levels:- high death rate: over 25 per mile- medium death rate: 15-25 per mile- low death rate: below 15 per mile

Death rate in Spain reduced later than in other European countries. The change started when structural death was reduced mainly due to the improvement in hygiene and medicine. Anyway there were moments in which the level increased again such as with the flu of 1918 or during Civil War. The lowest level was 8 per mile in 1989 and later it has increased due to the ageing population.There are regional differences. In general, death rate is higher in the interior because it was common the emigration of young people to work in industrial areas that were near the coast (in general).

Other element to consider is that the decrease of the death rate has been related to an important reduction in children death rate. All these elements have resulted in a younger population with a longer life-expectancy.

4. Migrations in Spain and the Basque Country

Migration is the phenomenon in which people leave their country or region (emigrate) to go to a different one (immigrate). This movement is normally done massively when it has an influence on population. The difference between the number of emigrants and immigrants is known as migratory balance. This element is taken into account to calculate the real increase in population.

The most common migrations are:- Internal: from the countryside to the cities and from the interior to the

coast.- External: those in which people move to a different country- Foreigners: in this case people from other countries come to Spain.

4.1. External migrations

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They can be seasonal or permanent. The former are those related to a job, for instance, the recollection of a harvest, while the latter are for a long period of time or even for life, something that was very common since the second half of 19th century.

Between that moment and until the Second Republic, the common places were North Africa (French colonies), America and Europe. The emigrants tended to be young people and the emigration was useful to equilibrate population and resources. A majority of these emigrants were from Galicia, Asturias and Canary Islands.

After WW1, due to the 1929 economic crisis emigration to America became more difficult and mainly it was directed to the Mediterranean space (Algeria) or to other European countries (France). The populations involved were unskilled workers and peasants.Emigration due to economic reason became more difficult after the crisis but political emigrations developed after Civil War, when a lot of republicans exiled to France, Soviet Union or Mexico.

After Civil War emigration was reduced due to the isolation of Spain. The movement was inverted after WW2 to direct mainly to America, this is Canada and US.

Until 1960 the target places for emigration were Argentina, Brazil or Venezuela and then France in Europe where industries demanded a lot of workers after WW2. After that period emigration to Europe was more general, mainly from Andalusia and Extremadura because the mechanization of agricultural works in Spain resulted in an excess of unskilled workers. As a result of this process Spanish population in these regions had a negative result.

4.2. Foreigners immigration

Spain has passed from being a traditionally emigrant country to receive foreign immigrants. There are different situations in these immigrants:

- Political refugees are those who due to difficulties in their countries have to exile asking for protection in the countries they reach to. If they are given asylum, this imply that they can live and work legally but if they are considered just as refugees they need to get all the permits and this tends to be difficult.

- Economic immigrants are those who come in order to improve their economic situation. Traditionally the countries of origin were Morocco, Philippines or Portugal but this has changed during the last decades. Nowadays it is more common to find people from the Caribbean area, South America or Eastern Europe. Other origin to bear in mind is that of Sub-Saharan people. In general it is not easy for them to get the permits to

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work legally and it is frequent to find them working in badly paid jobs or in exploitation condition.

The reception regions in Spain are Madrid, Catalonia, Andalusia and Valencia, even when their presence exists in other places too.

4.3. Internal migrations

Depending on the time and origin of the migrations, different situations can be distinguished:

- Seasonal or for a limited period of time, they are limited or cyclical, for instance, for collecting a harvest or with migrating livestock.

- Definitive or for a long time- Pendulum when the movement is frequent, due to labour reasons.

Since 19th century the movement of population from the countryside to cities has been important, this is, from the agricultural interior regions to the periphery that was involved in an industrialization process (Catalonia, Basque Country) or to small industries and services in regions that were developing (Madrid).

In the decades previous to the Civil War (1920-1930s) the former trends continued with population moving to coastal zones. In these regions industrial activity was developing and they became immigration areas with a lot of young effectives. Interior regions, on the contrary, maintained their traditional agricultural structure and were affected by emigration, becoming regions with old population and without population growth.

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After WW1 it was more difficult to migrate to America and during Primo de Rivera Dictatorship the expansion of work stopped the emigration in a moment in which mechanization of rural activities resulted in unskilled workers being made redundant. The only fact that accelerated internal movements was the filoxera crisis in the 1930s that destroyed grapevines.

During the 1930s and 1940s migration movements were quite stagnated due to the consequences of the 1929 crisis, the instability of the Second Republic and the Civil War and its consequences. Only the last of these factors provoked political migrations.

In the 1950s the Stabilization Plan brought the development and improvement of economic activity and, as a result, the population shift was huge and lasting because only the 1973 petroleum crisis stopped the trend. During this period industrial regions received a lot of workers arriving for less developed regions of the country. Later tourism would alter the direction of these migrations.

4.4. Real population increase in the Basque Country

The main characteristic of the Basque Country until 20th century was migration.

During the first centuries of the 20th century the general trend was of normal growth what supposed population losses in some areas. The evolution of Southern Basque Country until 1930s shows that it was a loss of population because even when it was a numerical increase, this was below the vegetative growth. Anyway, taking into account each province the result is an increase for coastal provinces whereas the interior lost population but in such a level that the general result gives a negative growth for the region as a whole.

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Migration has divided the Basque Country since the beginning of the 20 th century. Biscay, Guipuzcoa and Lapurdi have maintained an important growth thanks to industrial and services development. On the contrary, Alava, Navarre, Low Navarre and Zuberoa have lost population. From the 1950s and on, Alava and Navarre have changed to become immigration areas whereas the others have continued losing human effectives.

When the First Development Plan came in force in Spain immigration accelerated. The origin of the immigrants was Castile-Leon, Extremadura, Andalusia, Cantabria and Rijoa. This movement has two characteristics: an important number of women and the different destiny of the immigrants, with important groups going to the capital cities of the autonomous regions.

During the 1970s it was relevant the case of Alava, and mainly Vitoria, where a majority of the immigrants were censed, being a great amount of them women. From 1950 to 1981 agricultural towns of Alava lost population that moved to the capital city. This group of population was young and mainly feminine, what resulted in population ageing and a lack of equilibrium between sexes.

In the 1970s Vizcaya and Guipuzcoa were the territories that gained more immigrants. Anyway, the trend was inverted when the 1973 petroleum crisis resulted in serious consequences for industries. The need for remodelling traditional sectors brought a huge increase of unemployment and some immigrants returned to their origin places.

The result of this process was that coastal provinces experienced a negative migratory balance when populations inverted their shift or went to other autonomies, mainly to those around the Mediterranean Sea looking for other job opportunities.

In Northern Basque Country the migration trends were not altered, with population moving from agricultural spaces to industrial and services areas where they could improve their economic situation. As a result Lapurdi is the only province having a population increase and, what is more, it attracted a lot of retired people too.

5. Population structure in Spain and Basque Country

Population structure defines age, sex, activity sector, culture, health care and other characteristics or a society.

The last decade of the 20th century supposed a new structure for Spain defined by the following characteristics:

- increase of the role of woman- reduction of youngest sectors

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- ageing population- abundance of people born between 1950 and 1975- development of third sector- reduction of illiteracy rate- improvement of health care.

5.1. Composition by sex and age: population pyramid

Age and sex are two essential elements for the study of population. Age is required to compare generations, analyse the relation between active and non-active population, the generational take-over. Sex allows genre comparisons and the difficulties that can result of disequilibrium.

The graphical representation of these parameters is the age-sex pyramid. There are four different profiles:

- Progressive: young population is the main group and it is characteristic of undeveloped countries, with high birth and death rates.

- Stationary: it has bell profile. In this case the group of adults is the most important. It belongs to countries that are involved in a development process but they keep high birth rates while they have started reducing death rates, what results in an increase of life-expectancy.

- Diminishing: adult and aged groups are the most relevant while young are scarce. This profile is characteristic of a post-industrial region where birth rate is very low, population is ageing and there is a huge dependency rate.

- Regressive: It is frequent in regions where industrialization has largely evolved and that have experienced an important immigration. The generation take-over is impossible and growth is negative.

5.1.1. Population structure in Spain

Spain’s population has aged rapidly over the past 50 years. The figures at right show the percentage of Spain’s total population by five year age groups separately for males and females. In 1950, Spain’s population

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distribution conformed relatively closely to a classic pyramid shape, where each successively younger age cohort represents a larger portion of the total population.

By 2000, Spain’s fertility rate fell from roughly 2.6 in 1950 to 1.1, and life expectancy rose 13 and 16 years for males and females, respectively. Theses factors caused the population structure to shift to a formation more closely representing a pillar shape, where the total population is equally distributed among the age cohorts. The bulge in the middle aged cohorts represents the surge in fertility rates following WWII that produced the baby boom generation.

Anticipated low birth rates and increased life expectancy will result in a dramatically older society in Spain with the country’s average age increasing to 48 years old by 2030 from 40 today. By this time, Spain’s population structure will form an inverted pyramid, where a greater proportion of the population is concentrated among the older age cohorts.

5.1.2. Population structure in the Basque Country

There were 908,894 inhabitants in the Southern Basque Country at the beginning of the 20th century and the structure was the following:

- The pyramid profile showed a population in expansion with high birth rate and few people over 65 years, this is, with low life expectancy and high death rate.

- Population younger than 20 was more than a 40 per cent and there was disequilibrium in favour of male.

- The general structure of sex was equilibrated.

The evolution of the population structure was quite similar to that of the rest of Spain at the beginning of the 20th century, with a majority of young population while the adult and aged group presented a progressive decrease and with few effectives reaching to very old ages.

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From 1900 to 1930 the modernization began and population became more numerous in intermediate levels. This evolution was evident in 1991 and by that date the number of immigrants arrived during the industrialization changed completely the structure, giving more weight to intermediate ages, while young population started its reduction.

Nowadays the pyramid presents an involution process, with ageing population. The groups between 0 and 14 years are small and in this group there are more male than female; the group of young people is more important, with equilibrium among sexes. The last group of age tends to be more important due to the enlargement of life expectancy.

Comparing the structure of Spain and Basque Country it can be noticed the importance of immigration in the latter. This supposed the arrival of adults and after that the increase of children due to an increase of birth rate. This is the phenomenon known as baby boom. Other autonomies where industrialization was not as important as in the Basque Country did not experience the same evolution.

5.2. Population composition for economic activity

The economic development of a country gives information of the level of economic activity, age of workers, employment rate, and division of workers in sectors.

Depending on the economic activity it is possible to distinguish between active and non-active labour force:

-Active labour force: it is the population with legal age for work (16-65) who are really working or looking for their first job (unemployed active).

-Non-active population is the one out of the working spectrum, this is, retired, students and renters.

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Taking into account the three economic sectors the classification is as follows:- Primary sector: it takes agriculture, livestock, fishing, forestry and mining.- Secondary sector: it includes industry and building.- Tertiary sector: it groups all the services.

In a society, the higher the number of active labour force, the bigger the development degree. On the contrary, when a lot of people work in the primary sector that is an indicator of low development, but when the most developed sector is tertiary, this evidences an advanced country.

5.2.1. Composition of Spanish population depending on economic activity

The number of population with legal age for work has been increased taking into account absolute figures but analysing relative figures we see that the activity rate has reduced due to two main factors: firstly, the delay of the legal age for finding a job and, secondly, the earlier retirement.

The activity rate relates active labour force with the total amount of population. In developed countries that level is of about 40-50 per cent. In Spain at the beginning of the 20th century a majority of the population (70 per cent) worked in primary sector to be reduced to very low levels (10 per cent) at the end of the same century.

Secondary sector experienced a constant development until the crisis of the 1970s. After that this sector occupies about a 30 per cent of the active labour force.

The sector having a higher degree of development is the tertiary that reached to the 60 per cent of active population at the end of the 20th century.

The analysis by autonomous communities shows important changes of active population depending on migration. In the case of having received important immigration activity rate is very high.

Unemployment rate was only about 3 per cent before the 1970s crisis to reach levels of more than 20 per cent in the 1980s.

5.2.2. Basque Country’s population depending economic sector

Until 1973 active labour force was over 35 per cent, being secondary sector the most important while primary sector included about 8 per cent of the active labour force.

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There are provincial differences too because while in Biscay and Guipuzcoa secondary sector was the one having a greater weight, in Navarre and Northern Basque Country did not reach such levels.

After the 1970s the industrial crisis led to a re-conversion and the number of jobs in industry was dramatically reduced. Primary sector continued with its reduction too and tertiary sector was the one experiencing a bigger development.

During the 1980s there was an important increase in active labour force but the number of population having a job was reduced what resulted in an increase of unemployment rate. The effect of unemployment has been especially dramatic in industrial provinces, whereas Alava, for instance, has demonstrated a better evolution.

As long as the division in economic sectors is concerned, the provinces with a higher concentration of industrial population are Biscay and Guipuzcoa, even if with different characteristics. While in Biscay the gross amount of population concentrates along Ibaizabal river, mainly in the left side, in Guipuzcoa the division is more equilibrated. In Alava and Navarre the majority of industrial population is concentrated around the capital cities and in Northern Basque Country near the sea.

5.3. Composition of population depending on instruction level

Culture is an interesting indicator for analysing a society. In the case of Spain, the 1991 census showed that the communities having a higher degree of illiteracy were Extremadura, Andalusia and Castile-Mancha, while in Cantabria, Navarre, Rioja and

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Basque Country illiteracy was almost inexistent. By sex, women are in poorer condition in relation to this indicator.

The contrary effect, this is, the regions with a higher cultural level, are Madrid and other places having important universities where a considerable number of students concentrates.

6. Other problems and future of population

A critical component of a society’s ability to expand its production of goods and services is the growth of its labour force. As Spain’s population aged over the past half-century, its labour force has undergone changes as well. Soon after the end of World War II, many industrialized societies, including Spain, experienced a significant spike in birth rates that produced the generation known as the baby boom. As a result, Spain maintained high labour supply growth over the last half of the twentieth century as the baby boomers entered the workforce and was additionally bolstered by unprecedented labour force participation among females. Strong labour supply growth was achieved despite losing a portion of the population to emigration. Overall, the slowdown in population growth combined with higher than average labour supply growth over the past few decades created a temporary boon where a greater percentage of the population was economically active – often referred to as a “demographic dividend”. Between the 1970 and 2000, total dependency rates in Spain fell by about 20 percent while youth dependency fell by about 48 percent.

As the baby boom generation passes into retirement over the next few decades, labour force growth is expected to decline at a pace even faster than the rate of change of the population. The combination of prolonged low fertility, improving life expectancy and a greater proportion of the population in age groups that have lower propensities to work, will have the effect of diminishing labour supply growth in the

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future. In fact, over the 2020’s and 2030’s Spain’s labour force is anticipated to shrink at an annual rate of 1.5 percent or more. By this time, a greater portion of Spain’s population will be inactive, shifting the country’s total dependency up 38 percent and old age dependency up 86 percent from 2000 rates.

6.1. Old Age Pension System

Spain’s public pension system is made up of a single earnings-related benefit. The scheme is based on an “earnings base”, made up of pay over the last 15 years, not including the most recent two years, with earlier years’ earnings up rated with prices. After 15 years’ worth of contributions, the benefit received is 50 percent of the earnings base. An additional 3 percent of the earnings base is added per additional one to ten years’ contributions. An extra 2 percent of the earnings base is added for any years’ contributions over ten, with 35 years and 100 percent of the earnings base as the maximum. This means that the replacement rate relative to final salary is less than 100 percent and is reflected in the figure below with benefits from the public system for most earnings groups at about 90 percent of final earnings. However, beginning January 1, 2002, a provision was added to allow the maximum pension benefit to exceed 100 percent of the earnings base. If a retiree has at least 35 years of service, he or she can receive an additional 2 percent for each year over age 66 that payment of the benefit is deferred. While the normal age of retirement is 65, an early pension can be collected at a lower rate for those involuntarily unemployed.

The figures below indicate that Spain’s public pension system offers a relatively rich

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benefit compared to the other OECD nations. As indicated by the gross replacement rates, Spain’s public pension program is less progressive than many other OECD programs, especially for middle income workers. Additionally, workers can accumulate quite significant amounts of pension wealth within the system compared to other OECD nations.

To finance OASDI, employees contribute 4.7 percent of covered earnings, which are based on wage classes that vary according to 11 occupational classes and, employers contribute 23.6 percent of earnings based on the same occupational groups.

Expectations are for old age pension costs as a percentage of GDP to grow quite extensively over the coming decades under the current program. While the average for all OECD nations old age pension costs as a share of GDP are expected to increase by roughly 43 percent between 2000 and 2050, pension costs in Spain are expected to nearly double that pace at over 85 percent over the same period.

A major source of the burden caused by demographic aging is due to rising dependency rates. As a result, Spain will need to figure out how to support a growing inactive population with fewer workers. A remedy to this problem is to adopt

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programs that promote greater workforce participation at all ages. Some countries do a very good job at achieving high workforce participation rates across various age and gender groups. The figures above show how Spain’s labour force participation stacks up next to the average of the Top-five OECD nations. Activity rates in Spain fall short of rates in the Top-five countries for every age and gender group. Most noticeably, females and older individuals participate in the labour force to a much lesser extent than those in the Top-five countries. If Spain adopts measures to increase labour force participation of older age groups (55+) and females to rates similar to the Top-five OECD nations, it could significantly reduce its old age dependency rates. However, by adopting policies to entice workers to prolong their retirement at rates similar to those achieved by the Top-five OECD nations, Spain could reduce its dependency burden by raising its activity rate to over 2.5 workers per retiree – which is even higher than today’s rate.

SPANISH POPULATION AGEING PROCESS (2005)

Source: Wikipedia.

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