Spanish Public Pension System Gets a Pro-Manifesto

Spanish public pension system is neglectedAccording to the government, the Spanish Social Security will save up to €32,939.95 million between 2014 and 2022 thanks to the reform of the public pension system. The system’s reserve funds are set to cover 23.6 billion euros of losses for 2012 and 2013, Labour Minister Fátima Báñez told the parliamentary pensions committee in Madrid.

Under the new rules approved by the government, pension payments will be calculated under a complex formula including economic health, the number of pensioners and the financial situation of the social security system. However, these figures reveal that pensioners will lose purchasing power over the coming years.

If you look at the news all over the world, the only information you will get is how good the reform is for Spain and its citizens. Now, we would like to show you the “discordant note”, as it were: the view of experts on economy and law that are against the underway reform.

Pro public pension system manifesto

Ranging from market watchers to professors and jurists, a wide group of experts have drawn up and signed a document to openly reject the report of the Commission of Experts appointed by the Spanish government. They consider that the reform of the public pension system “is not a measure for combating the economic crisis, but, on the contrary, it involves another step towards the dismantling of the social state.”

The document explains that the sustainability of the public pension system has always been considered a “technical problem” when it is, in fact, a political one. “The key question is income distribution. The intention is to make us believe that sustainability of the public pension system depends on ‘how many people produce’, when the essential variable is ‘how much is produced’.”

One of the political arguments to support the reform of the pension system is that there are 16.78 million contributors against 8.26 million pensioners plus 5.97 million unemployed in Spain. Despite these figures, this document emphasises that the Spanish government hasn’t included the increasing number of workingwomen. In the last 20 years more and more women have entered the labour market, without changing the total population.

One of the signatories, the economist Pedro Montes (who worked at Bank of Spain Studies Service for 38 years), explains:

“If the economy moderately grew and generated employment so as to mop up the millions of unemployed people, and there were also a moderate increase of each employee’s productivity (…), there would be an increase in the income levels of Spain and then, it would not be necessary to cut pension payments in the future”.

Most experts agree that their purpose is to unveil the truth. “There are two main truths: first, it is unnecessary to cut pensions in order to guarantee their future. There is a clash between experts based on how the problem has been formulated, so the root is ‘ideology’. The second truth is related to the true future of pensions. The only aim of the people in charge is to cut them as soon as possible, not thinking about the consequences on the long term,” adds Montes.

On the other hand, they explain that the “real threat” to pensions is that all political parties try to present the Social Security system as something distinct and separate from the State services. Thus, the system is not included in the General State Budget and its only source of funding is social contributions.

That is why the government presents the public pension system as “unsustainable”: because they have utterly abandoned it and all people behind it (pensioners, unemployed and the like).

Professor of Universidad Autónoma of Madrid Fernando Esteve Mora (another signatory) is realistic about the future of this document: “Of course, I already know –and I think everyone of us does– that we will achieve nothing. However, I do it for the sake of truth concerning all this issue of pensions.”

The report is written in Spanish and it is available here.

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