Friday, February 3

Minimum income recipients will earn more if they find a job

A housemaid. / FILE, ARCHIVE

The Government approves the incentives that will allow recipients to increase their income for a year if they improve their employment situation

Lucia Palacios

New twist to the Minimum Vital Income (IMV) when it has been running for more than two years. As of 2023, the beneficiaries of this aid will be able to receive a bonus if they access a job that will allow them to increase their amount to around 17,000 euros per year. The Council of Ministers approved this Tuesday the regulation of employment incentives that aims to promote the incorporation of the recipients of this income into the labor market and thus prevent them from falling into the trap of not looking for work or increasing their income for fear of losing their benefit or see its amount reduced.

Although the IMV is already compatible with employment, until now that job acted as a cut of this aid (that is, the salary received was subtracted). But from January, which is when it will come into force, it will act as an increase in your income, since it guarantees that if a recipient of the minimum income finds a job or improves his salary, he will always earn more than if he did not. And you do not need to request it, but it is activated ex officio when the National Social Security Institute (INSS) carries out the annual review, generally in the month of April.

For this reason, those IMV beneficiaries who have suffered changes in work income -either because they have found a job or because they have extended their hours or improved their salary- can automatically access the following year to receive an incentive for a maximum of twelve months which allows them to always increase their income to around 17,000 euros per year, depending on multiple variables, including their family situation.

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How is its amount calculated? The method is complex and that is why in the coming weeks the Ministry of Social Security will launch an online simulator so that beneficiaries can calculate how much they could charge if they find a new job or extend the hours of their contract and see that they do compensates.

Multiple cases

What the employment incentive does is that part of the increase in salary income does not count when computing the IMV, which means that in practice for each euro you earn from work income you get more income than before. The improvement acts gradually and is more intense to support increases in initial wages, as well as being greater for those who go from inactivity to activity, while it moderates as the recipient improves their income from work.

The amount therefore depends on three factors. In the first place, the composition of the household: it will be greater in those with minors and, in addition, special treatment is given to single-parent families and those in which disabled people live together. Secondly, the incentive varies depending on the salary increase, so that 100% of the income from work that reaches up to 60% of the guaranteed income is subsidized; that is, for every euro that the recipient earns, he receives one more euro of disposable income. The incentive is softened and you receive between 20% and 40% more from work income from 60% of IMV. Finally, the amount will also depend on the type of labor movement: it will be higher for people who were outside the labor market and somewhat lower for those who were already working.

Thus, for example, a person who lives alone and receives a minimum income of 5,899 euros, if he finds a job with an income of 1,000 euros, this salary is 100% subsidized and he would earn 6,899 euros a year. If instead of 1,000 euros, she earned 4,500 at her job, she would receive a total of 9,727 euros per year.

100,000 beneficiaries

In addition, the incentive is maintained even when the increase in salary income exceeds 100% of the minimum income, although in an increasingly diminishing way, until it ends when the increase in income reaches 1.7 times the benefit, so the The maximum that a person could receive would be about 17,000 euros per year, more than the minimum wage.

This bonus for employment will be temporary, so that it will work for one year, and in the review it will only be applied again if the recipient has increased his salary income again, in order to encourage him to continue improving his inclusion situation.

The Ministry of Social Security estimates that one in five households may benefit from these incentives, that is, around 100,000 families, and that this measure will not have any fiscal cost, but rather the opposite, that it may even raise income, since the IMV is reduced when working and also increases contributions. Moreover, they estimate that for each euro of incentive, between 1 and 3.5 euros can be raised.

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