Almost five million workers do not pay social security based on their real income

In Spain, there are close to five million workers whose social security contributions are not based on their real income, however, it is not only the self-employed who are guilty, even though it seems that they are the ones spoken of almost exclusively when this subject arises, especially during the final stretch of negotiations for the new structure.

In reality, almost one in four workers does not pay Social Security based on their actual income, which is close to five million of the 20.2 million people who are currently registered in the system, since we must also add those with salaries above 50,000 euros and domestic workers.

It is fact that the largest group is made up of the self-employed who account for more than 3.3 million workers who freely choose their contribution base, and the vast majority (85%) opt for paying the minimum fee.

At the moment the base rates are 294 euros per month if they are an individual, and 377 euros if they are a company, but this will change next year when the new model will begin to be applied so that their contributions are made based on their net returns.

High earners:
There is another group of workers made up of those who earn almost 50,000 euros a year, and don’t pay any extra for it. The threshold between the minimum and maximum contributions is 4,139.40 euros a month, or 49,672 euros per year.

According to the Ministry of Social Security, 1.4 million employed workers currently earn more than 50,000 euros a year, and a ‘sliding scale’ is proposed to be introduced depending on how much you earn, although they intend to increase the maximum contribution bases over the next year.

Domestic workers:
Finally, the almost 380,000 domestic workers who are registered in the system do not contribute based on their real income either, but based on a rate.

The problem in this sector is the high percentage of the ‘underground economy’ that exists and must be combated. In fact, while only 378,000 domestic workers are registered with Social Security, almost 550,000 are listed in the Active Population Survey (EPA), meaning that 165,000 work illegally.

This is why the Government has launched a campaign against fraud in this group that has already allowed the regularization of thousands and thousands of workers.

Imminent reforms:
The objective of the Government is that imminently the contributions of these five million affiliates get closer to their real income. For this reason, the Ministry of Inclusion will hold a new meeting this week with the social agents to try to agree on the new contribution system for the self-employed that will come into force in 2023, although for the moment the last proposal of thirteen sections with quotas between 250 and 550 euros has the resounding rejection of the CEOE union.