The first measure towards the construction of a modern system of social protection was the Law of Labour Accidents of 1900; pushed through by Eduardo Dato, three-times President of the Spanish Government. This law established employer responsibility for accidents at the worksite, which could be covered by suscribirng to an insurance policy through private companies.

Obligatory old-age insurance did not appear until 1921, when the Obligatory Workers' Retirement plan was created. This insurance plan covered all wage-earners and was financed by means of an employer fixed obligatory quota, a state contribution for each wage-earner and a compulsory surcharge on inheritances. A retirement pension of one peseta per day was conceded upon reaching 65 years of age. This amount, at that time, represented approximately one-fifth of an average salary. Inflation and the non-revalorization of these pensions meant a loss in acquisitve power and the almost complete disappearance of their protective power.

During the Second Republic, and especially during its first phase, which coincided with the term of the Socialist Francisco Largo Caballero at the helm of the Ministry of Labour, substantial labour legislation was enacted and international agreements were ratified. The creation of obligatory maternity social security, accident protection in agriculture and the modification of labour protection in industry are good examples of his work. The Civil War broke out at a time when the public was being informed of pending legislation which was to unify social security regarding old-age, disability and death with those for maternity and illness.

With the installation of the Francoist dictatorship, and even during the Civil War, an idea was beginning to form, based on the preponderant Falangist ideology, to promote social security. In 1938, the Law of the Bases of the Obligatory Regime of Family Subsidies was enacted by the Nationalist side, and in 1939, Workers' Retirement was replaced by the Obligatory Regime of Old-Age Benefits. Obligatory Health Insurance was created in 1943, and Obligatory Insurance for labour diseases was created in 1947, at the same time that the Old Age Benefits were transformed into Old-Age and Disability Insurance. This apparent extension in social security coverage came about in the post-war context, in the middle of a difficult economic situation and its function was more political in practice than it was effective.

In the same period, Mutual Benefit Funds began to appear. These were entities of a guild-like nature which grouped together workers in the same sector and that doubled existing coverage, but whose financial structure, which was funded by means of a mixed system of sharing and capitalization, allowed for the paying out of higher pensions.

The Law of Bases of 1963 aimed at a management unity in the social security system, in the hope of securing greater administrative rationality. However, a financing system that was founded on the basis of contributions, very different from real salaries, and a very slow state donation were responsible for the reduced economic scope of public social coverage, which had resources equivalent to 8.7% of the GDP in 1971. In consequence, pensions were very low.

To obtain higher financing, the Law of Financing and Perfecting was drawn up in 1972, which established a system of contributions in proportion to real wages and a growing state donation capable, theoretically, of an annual revaluation of pensions. Social Seurity spending in relation to GDP represented 10.9% in 1977 and 12.3% in 1981. The effect of this increase was especially disturbing because in spite of maintaining the volume of resources at percentages that were lower than the European average, this occurred at a moment of enormous economic difficulty.

For this reason, actions were taken to try to rationalize its growth and contain social security spending, so that its increase might be accompanied by an increase in the GDP. This goal was born out by the Law for the Reform of the Basic Employment Law, of 1984 and the Law for Urgent Measures for the Rationalization of the Structure and the Protective Action of the Social Security System. This last law was focused on the specific area of pensions. These measures have been accompanied by others governing the increase in spending, which have incorporated groups with insufficient or a complete lack of protection and have improved the levels of the lowest existing pensions, in an effort to obtain a more modern and efficient system of social protection.