With pensions in Spain it happens as with climate change: there is a certain consensus that we push ourselves to the limit of sustainability (in one case of the Social Security system, in the other, of the planet), but the steps to avoid it are still insufficient. The reason is that in both cases it involves taking unpopular measures, which governments prefer to postpone, until they are forced to do so. In Spain, after several pension reforms, we once again find ourselves in the urgency of modifying the system to guarantee its future viability, which is nothing more than getting income to cover expenses, which is currently in question. The urgency is given by the European Commission, before which the Government has promised to have a reform approved before December 31. It is the condition for Spain to receive European funds for recovery. There is barely a month left to present the homework done to Brussels, a highly difficult mission given the divergent positions between the minister of the branch, José Luis Escrivá, and the social agents, as well as within the Government itself. Vice President Yolanda Díaz (Podemos) has been openly critical of the proposal, in a new display of discrepancy between coalition partners.
The sustainability of the pension system can be addressed increasing income to Social Security or reducing expenses, or a mixture of both. The last reform of January 2022 incorporated measures to increase contributions, that is, income (incentivising the delay of the retirement age and penalizing early retirements), but also linked the revaluation of pensions to the rise in the CPI. It was a welcome measure then, because it is a way of maintain the purchasing power of pensioners. The Government probably did not expect that the year would end with skyrocketing inflation that has caused pensions to rise 8.5% in 2023, which will have a budgetary impact of more than 13,500 million euros.
It is therefore necessary to undertake formulas that give stability to the system. The one presented by Escrivá tries to correct the current imbalances through two controversial measures. One of them is extend the period for calculating pensions, from the current 25 years to 30 (being able to rule out the two worst). The minister says that this is how workers with more discontinuous careers benefit, although those who have been improving their employment situation over the years are harmed. The unions (and Yolanda Díaz) fear that the effects will be negative for the majority. It is hard to understand why Escrivá insists on this highly controversial point if, as he claims, it has a neutral fiscal effect, that is, it does not help the sustainability of the system. For this reason, CCOO and UGT demand that it be withdrawn as unnecessary. The second measure proposed by the minister, to increase the contribution bases of the highest salaries, on the other hand, would clearly increase Social Security income. The unions approve it to the same extent that the bosses reject it, because means increasing labor costs.
Escrivá cannot ignore the requirements of Brussels, nor can he further postpone a necessary reform, but It is not convenient to carry it out without the consensus of the Pact of Toledo. The lack of social agreement and political guarantees in this matter could ignite the conflict and wear down the Government.