Government and unions yesterday sealed the agreement for the second part of a pension reform that will mean an increase in the minimum pension of 22% in four years, until it reaches 16,500 euros in 2027. These are the calculations which was facilitated by the Minister of Inclusion and Social Security, José Luis Escrivá, in his intervention before the Toledo Pact commission.
Yesterday, everything went according to plan. In the morning, the management bodies of CC.OO. and UGT unanimously ratified the agreement, after managing to add some additions, basically guaranteeing a floor for minimum pensions.
Afterwards, José Luis Escrivá and the two general secretaries, Unai Sordo and Pepe Álvarez, presented the agreement to the media, and finally, the minister gave details to the Congress of Deputies. Today, the sequence continues with the approval of the decree law in an extraordinary Council of Ministers. It is a two-way agreement, but with a discrepancy from the CEOE, which is adamantly opposed to the reform.
The most relevant developments that were revealed yesterday are the realization of the increase in pensions. Specifically, this is a 22% increase in the minimum, both contributory and non-contributory. The goal set is that in 2027 the minimum contributory pension with a dependent spouse “cannot be lower than the poverty threshold calculated for a household composed of two adults”, according to the latest draft. In this way, this pension would go from the current 13,500 euros per year to 16,500 in 2027.
The increase is also 22% for non-contributory pensions, and here the result is to go from the current 6,800 euros to close to 8,300 euros in 2027.
Another of the elements that Escrivá specified was the increase in resources that he hopes to obtain with the three new income formulas, which will add one point to the GDP in the 2040s, which is when the system will be more strained for demographic reasons . It is when the majority of the baby boom generation enters retirement, there are more of them and more income than current pensioners. The income would basically be achieved through the increase in the maximum bases (0.4 points), and the intergenerational e equity mechanism [MEI] (0.5 points). The rest is provided by the solidarity quota (0.10 points), one of the novelties of the reform, which involves taxing up to 6% the part of the salary that is above the maximum contribution base. Something that will only affect contributors to the general Social Security system, not the self-employed.
In the presentation of the agreement, both the sustainability of the reform and the criticism of the absence of the CEOE were insisted upon. “We achieve sustainability with a gradual reinforcement of the system’s resources and without jeopardizing the productive fabric or Spanish companies. There is a lot of demagoguery going on with this issue without putting any numbers on the table”, said Escrivá, who added that he is hearing a lot of “old discussions” about pensions, with approaches from the past.
For his part, the general secretary of the UGT, Pepe Álvarez, stated that “it is a shame that the CEOE does not appear in this signature. There are no arguments to justify it”, and he added that the agreement is aimed especially at young people, who know that “they have their future guaranteed in pensions”. The general secretary of CC.OO., Unai Sordo, also stated that the increase in social contributions that is expected “is absolutely manageable for companies” and that to say that it will drive away talent and harm job creation is “a frivolity”.
For his part, the president of the CEOE, Antonio Garamendi, asked on Wednesday for “some respect” towards his opposition. “When a proposal is brought forward that you think is not good for your country, our obligation is to say no”, said Garamendi.
