Spain's left pitches €20,000 in cash for youths

Maria Canas, a second-year medical student at a university in Salamanca, Spain, started working to save money for her studies at 16. She was finally able to enroll in university at 28 and two years later has learned to live at a subsistence level. "My economic situation is terrible," she said.

To address such situations, Spanish Deputy Prime Minister and Labor and Social Affairs Minister Yolanda Diaz and the newly formed left-wing alliance Sumar intend to make €20,000 ($21,950) available to people aged 18-23. The "universal inheritance," comparable to the idea of a universal basic income, is aimed at reducing social inequality in Spain. Young people just starting out would thereby have a foundation that enables them to study, train or start a business.

The funds would be available to all 18-23-year-olds, regardless of their economic circumstances. With half a million people coming of age in the country every year, the cost of the basic inheritance would be €10 billion, about 0.8% of the gross domestic product. The aid would be financed by a tax on the rich.

The German Institute for Economic Research presented a similar plan in a study released in late 2021. Various politicians and experts have taken it up since then, most recently Diaz, who hopes to win in Spain's snap general election at the end of July.

Interrupting generational inequality

In Spain, family wealth and the inheritance that comes with it often determine a young person's trajectory. ”Wealth inequality is much greater than income inequality," Jose Ignacio Conde-Ruiz, deputy director of the private economic research foundation FEDEA, told DW. He finds this worrying.

According to data from Spain's Center for Economic Policy (EsadeEcPol), family income has such an impact that children of the wealthiest 10% of the population garner an average annual income of almost €30,000 per person in adulthood, while that rate rises to almost €40,000 for the richest 1%. By contrast, children of the poorest 10% have an average annual income of just under €17,000, and very few manage to climb the social ladder to increase that.

"We have huge wealth inequality that is passed from generation to generation," EsadeEcPol deputy director Jorge Galindo told DW. Universal inheritance "could be a way to interrupt this transmission of inequality,” he said, and give young Spaniards more freedom to build their lives.

But there are disputes even among supporters. For example, some question whether the money should be available to all young people, regardless of whether their families are wealthy.

"A universal measure would be easier to implement because the funding would come from a new tax on the rich," Conde-Ruiz said. "Young people who come from a more privileged background would still get the basic inheritance, but they also have to pay a lot of taxes.”

Galindo said the measure would be more effective if it were made dependent on the household's income or wealth.

Others have suggested alternative levers to compensate for inherited privilege, such as better access to affordable housing for people who need it.

An EU problem

Young people across the European Union are increasingly pessimistic. Sixty-eight percent of respondents to a survey of youths conducted in June by the tourism conglomerate TUI's research foundation said incomes in their home country were "very" or "somewhat" unequally distributed.

Measures to create equal opportunities vary across the European Union. In Germany, students receive financial support under the Federal Training Assistance Act, known as BAföG. The amount depends on their parents' salaries — the less parents earn, the more their children can get.

Sweden and Denmark offer more universal support for students.

Diaz said that under her plans young people could decide for themselves how to spend the money — they do not necessarily have to invest it in education.

Implementing universal inheritance

It remains to be seen whether the campaign proposal of guaranteed basic inheritance will become reality in Spain. There are also questions about what its implementation wold actually look like: Who will pay the additional taxes? Or, if the money comes from the existing budget, how will it be used?

Conde-Ruiz said policymakers would have a hard time cutting back on benefits such as pensions. This points to the other side of the heated debate about intergenerational equity in Spain. Pensions were recently increased by 8%; meanwhile, many young people feel that they have been left empty-handed.

This is where the platform comes in, pitching universal inheritance as an attempt restore balance between the generations.

"The state would be helping young people with this because it understands that the country's economy will have to be run later by people who are young now," said Canas, the medical student. That, she said, would be an important investment in the future of young people in Spain.

This article was originally written in German.