Brussels’ concern about the unsustainability of Spain’s pension reform is growing. This comes amidst spiralling inflation and at a time when it has to validate Minister Escrivá’s reform to authorise the transfer of 12 billion euros from the second tranche of the Recovery Plan. The government has yet to ask the European Commission for the payment of the second tranche of the Recovery Plan, the largest, almost 12 billion euros….
The newspaper El Economista explains today that on the same day as the Government approves the increase in pensions for this year, it will also have to come up with an extra almost 3.125 billion euros to finance the operation. This follows the deviation between the price estimate forecast by the Executive in the current General Budget and the strong rise in inflation in the last few months of 2021….
The OECD criticises the fact that Spain is abandoning the system of automatic adjustment of the pension system – which used the so-called “sustainability factor” – to replace it with the so-called “intergenerational equity mechanism”. The latter involves a rise in social security contributions of 0.6% over 10 years, something that is not even equivalent to the costs of indexing pensions to inflation. According to the OECD, the “intergenerational equity…
Nick Ottens (Atlantic Sentinel) | Emmanuel Macron is reportedly mulling pension reforms that were put on hold during the COVID-19 pandemic. There are risks: reforms will almost certainly spark protests, including from trade unions, which oppose raising the retirement age. Macron can ill-afford social unrest a year away from the election. But it could also burnish the French president’s reformist credentials after the COVID-19 crisis forced him into a more…
Fernando González Urbaneja | Escrivá manages to push through the first chapter of the reform book, which has two sides: guaranteeing purchasing power (more costs) and lengthening the retirement age, along the lines of the 2011 reform.To justify the budgetary subsidies to the system, which could distort and politicise it, the argument of “inappropriate expenditure” is used, which is a flexible box where everything that needs to be put in can fit.
The Social Security allocated 10.154 million euros to the payment of contributory pensions in May. This is a record figure which is 3% higher than a year earlier, the Ministry of Inclusion, Social Security and Migration reported on Tuesday. More than two-thirds of the pension payroll went to retirement pensions, which totalled 7.303 million euros, 3.6% more than in May last year. Widows’ and widowers’ pensions were allocated 1.74 million…
Fernando González Urbaneja | Spain has a priority, essential employment problem: high chronic unemployment and job insecurity. Both of these are among the essential causes of a blushing inequality, among the worst in Europe. Then, to complicate the solutions, comes the problem of the high public deficit, which has increased over the last decade as an inevitable inevitability. A debt aggravated by its dependence on external financing with a bias towards instability. At the heart of this debt is the chronic deficit accumulated over the last decade in the pension system, which widens its deficit every year.
Scope Ratings | The government is prioritising growth over budgetary discipline, which for the moment is appropriate given the large output gap. Spain will run a wide budget deficit for some time. For 2021, the authorities forecast a deficit of 7.7% of GDP, which is based on a rather optimistic economic scenario. Thus, should growth be weaker than expected in the coming years, Spain’s public finances would deteriorate further – a risk captured with Scope’s Negative Outlook.
Javier Garcia-Arenas (CaixaBank Research ) | The pension reform currently being prepared in Spain is a hot and pressing issue. After all, the structural deficit of the Social Security system (around 18 billion euros) and the need to ensure the system’s long-term sustainability in the face of demographic ageing are inescapable challenges for our economy. In this context, the minister for Inclusion, Social Security and Migration, José Luis Escrivá, has announced that he intends to boost workplace pension schemes (also known as company pension) in order to encourage long-term saving, as well as indicating that the British model could serve as a good example to follow.
The Government is forecasting a 0.9% revaluation in public pensions in 2021, following the increase already applied this year. This would allow for ensuring pensioners’ purchasing power, as it is included in the 2021 Budget Plan which the Executive sent last Thursday to Brussels.