Stuck at 52? Rethinking unemployment assistance for older jobseekers in Spain

By Aida Caldera, Claudia Ramírez and Dimitris Mavridis, OECD Economics Department

Spanish Version

Spain’s labour market has undergone a strong recovery in recent years adding 3,5 million jobs over 2018-2025, but many older workers are still left behind. While employment among older workers has risen overall, from 41% in 2024 to 61% in 2024, close to half of the long-term unemployed are aged 50 or older. Nearly half a million jobseekers aged 52 and over have been out of work for years, many since the housing crisis, and face major barriers to re-employment.

Helping these older workers return to meaningful work is not just a social or economic need, it’s an opportunity. As life expectancy rises and more people reach older age in good health, Spain can do more to support those older workers to stay active. But doing so means rethinking outdated benefit rules and expanding support systems. With an ageing population and low birth rates, extending the careers of healthy, experienced workers is crucial to strengthen growth and public finances today, and to safeguard pensions for the future.

What is going on?

One reason behind the problem of long-term unemployment among older workers in Spain is how unemployment assistance is designed for workers aged 52 and over. Spain’s unemployment benefit system has two pillars. First, unemployment insurance (UI) replaces a portion of previous earnings for up to 24 months, provided workers have accumulated enough contributions. When the unemployment insurance runs out, or if workers don’t qualify, unemployment assistance (UA) steps in, offering a flat-rate payment.

The unemployment assistance has special features for workers aged 52 and over. The financial support can continue until retirement, and eligibility is based on the individual’s income rather than the household’s. More importantly, the Public Employment Service (SEPE) pays pension contributions on the beneficiary’s behalf as if they were working full time. For those aged 52 and over, time spent receiving unemployment assistance builds pension rights just like actual employment, with contributions recorded at 125% of the minimum contribution base. Today around 70% of those that receive a subsidy for long-term unemployment are aged 50 or older (Figure 1).

While this support helps people who really need it, its design may unintentionally reduce incentives to work, even for those who might want to. For many older recipients, accepting a low-paid job means losing both the benefit and the pension contributions credited while unemployed, which means that the net gain from working can be minimal. Recent evidence shows that long-term unemployment increases sharply at age 52, the point when people become eligible for the special subsidy.  While fewer than 5% of assistant recipients are unemployed for over a year at age 50, that figure rises to more than 40% by age 52 (AIREF, 2024).

A recent reform reshaped unemployment assistance

A major reform reshaping unemployment assistance started to be implemented in 2025. It broadened eligibility to groups previously excluded, extended benefits for some recipients, raised payments while gradually reducing them over time to keep incentives strong, and introduced a new employment supplement that allows people to keep part of their subsidy for up to 180 days when they return to work. However, it did not change the special unemployment assistance scheme for jobseekers aged 52 and over, where the strongest work disincentives remain.

Policy priorities

To support longer working lives and reduce long term unemployment among older workers, Spain could reform the non-contributory assistance for workers aged 52 an over. It is key to equalize support across ages, with stronger targeting and clearer activation. Concretely, Spain could reform non-contributory unemployment assistance by:

• aligning rules so support does not become indefinite at a specific age;
• restricting pension accrual to the unemployment insurance phase only, avoiding pension build-up during assistance;
• introducing household means-testing to target resources to those most in need rather than age;
• tapering benefit levels gradually, over time and/or with earnings, to reduce “all-or-nothing” incentives;
• setting reasonable duration limits; and
• enforcing active job search and activation requirements consistently.

At the same time, the reform should go hand in hand with greater investment in upskilling. Training vouchers co-financed by employers, especially in sectors facing labour shortages or undergoing digital transitions, could help older workers re-enter and thrive in the workforce. Expanding flexible working-time arrangements and improving awareness among employers of the value of experienced workers would support reemployment.

Spain’s labour market is improving, and many recent reforms have yet to show their full impact. With the right mix of incentives, re-training opportunities and flexible work options, Spain can unlock the potential of experienced workers, support inclusion and address its demographic and fiscal challenges.

References:

OECD (2025), OECD Economic Surveys: Spain 2025, OECD Publishing, Paris, https://doi.org/10.1787/abc5c435-en.

AIRef, (2024). Recuadro 1. El subsidio por desempleo: reformas y efectos sobre el empleo, in “Informe sobre las líneas fundamentales de los presupuestos de las AA. PP. 2025”. https://www.airef.es/wp-content/uploads/2024/12/AIReF_Informe-Lineas-Fundamentales-2025-2.pdf