Hold the umbrella

George Steiner warned that civilization is a very thin layer: beneath the skin of culture, there is always the harshness of the elements. The European welfare state was, in essence, a response to this fragility, a system designed to reduce individual exposure to economic risk through strong public institutions and stable redistribution mechanisms. For decades, the model worked. Sustained growth, increased productivity, and balanced demographics. These conditions allowed for the expansion of social rights without jeopardizing fiscal stability. Today, the framework is different. Potential growth is lower, the population is aging, and pressure on structural spending is increasing. In this new context, it is worth asking whether a welfare state, which is the essence of our European model, is sustainable. In Catalonia and Spain, it depends fundamentally on four variables: productivity, the labor market, public funding, and the tax structure. Is the economy productive enough?

A state's capacity to sustain universal public services is directly linked to productivity. More productive economies generate higher wages and, therefore, greater tax revenue without the need for a significant increase in taxes. In the case of Catalonia and Spain, average productivity remains below that of the main countries in the European region. A significant portion of economic activity is concentrated in low value-added, labor-intensive sectors. This model is capable of generating employment but with limited revenue. The consequence is structural: with low-wage jobs, even if they have high value (such as elder care), the capacity of governments to expand or even maintain the current level of social spending is reduced. Without a transition towards capital-, technology-, and knowledge-intensive activities, the growth in public revenue will be insufficient to absorb demographic and social pressures.

In other words, for example, when PISA results tell us that schools aren't functioning well and teachers are dissatisfied with the difficulties they face, we are collectively sinking. Without better training and better jobs, we are eroding the social safety net.

A high proportion of low-income earners limits income tax revenue and reduces the system's redistributive capacity. At the same time, population growth increases the demand for healthcare, education, and social services.

This combination of low wages and growing social needs creates a tension that cannot be resolved solely with more jobs, but rather with better jobs. Leandre Ibar explains the situation very well in this Sunday's dossier, detailing that in 2010, the Catalan government's spending on healthcare, education, and social rights "was €10.3 billion, €5.2 billion, and €2.4 billion, respectively. By 2024, the figure had risen to €16 billion, with €3.7 billion allocated to social rights. That is, increases of 55%, 48%, and 54%, respectively." But in these 14 years, the Catalan population grew by more than half a million inhabitants, and prices rose by 30%. In all three cases, and always adjusting the data for inflation, per capita spending levels were not recovered to those of 2010 until the pandemic hit.

Can the wealthy sustain the system?

In this context, a recurring proposal reappears: how to increase the contribution of taxpayers with higher incomes and wealth. The debate is legitimate, but its effectiveness depends on the design. Not all high incomes are of the same nature. High wage incomes are more easily taxed; capital income—capital gains, dividends, wealth structures—offers more room to defer or divert income. The decisive factor is not only the nominal rate, but the effective rate. Inspection, regulatory simplification, and international coordination condition actual revenue collection. European welfare states are financed primarily by broad taxes—social security contributions, VAT, and taxes on average income—and not exclusively by the wealthiest segments. Greater progressivity can help strengthen the system, but it will hardly replace a broad productive base and higher average wages. In Catalonia, the sustainability of the system incorporates a specific element: the regional financing model. The Generalitat manages areas of responsibility that concentrate the majority of social spending – healthcare, education, and social services – and the level of resources available per capita is crucial. If allocated revenues do not grow in proportion to demographic needs and structural costs, the pressure inevitably and directly impacts the quality and accessibility of services. Indirectly, this affects social cohesion and strengthens populism and the far right. And this is where we are. The welfare state does not face an imminent risk of disappearing. The risk is more subtle: a progressive erosion stemming from a persistent mismatch between revenue and committed spending. The crisis will not arrive with a sudden collapse (beyond the railway system, which lacks investment), but with a gradual degradation of public services. The question is not only who should pay more, but whether the economy will generate enough value to sustain the protective layer that maintains our social contract.