The Minister of Inclusion, Social Security and Migration receives EL PERIÓDICO during a visit to Tarragona last Thursday. In his opinion “the maximum pension should rise between 15% and 20%” through a gradual process. Escrivá, who sees a recession “unlikely”, estimates that around 30% of pensioners will benefit more from the pension reform, although he considers that all workers will benefit from a system that better protects their pensions against events during their working career that are out of their control and that alter their contributory career, as well as women, who are the ones who present the most problems with gaps in the contribution.
On September 12, a month and a half ago, he began contacts with employers and unions for the block pending the pension reform. Since then it has not called another joint meeting. Will you have time to close it before December 31?
That there have been no meetings of the table does not mean that we are not maintaining contacts and working intensely. We believe that we are close to closing an agreement on two elements. On the one hand, trying to find a solution to a situation that derives from the new labor realities that mean that the last years of contributions are not the best for a growing number of people. We have to see how, through the calculation period, the gaps and the possibility of excluding the worst years, we can make the system more equitable.
And the other item?
In Spain we have a relatively low and capped maximum pension for what is usual in the countries around us. We want to expand the limit and do it gradually. And at the same time that we do it, increase the maximum contribution base.
Do the elections in the employer’s association explain in some way that there have been no new meetings?
We cannot wait for the results of the CEOE elections because this is a milestone that has to go through Parliament and has to be closed before the end of the year. I hope, as I have seen at other times, the open-mindedness of all social agents.
In its roadmap it contemplates a progressive increase in the maximum bases. In how many years do you expect to do it?
We have to close it with the social agents, but I would think of not very different horizons in which the system is expected to be subject to a little more tension as a result of the imbalance between generations. That brings us to around 2050, when pension spending will decline.
From what year would this increase in bases begin to be applied?
It will not start next year and it will do so very gradually and very smoothly, as we have done with the self-employed.
“The increase in the maximum contribution bases will be done very gradually and very smoothly, as we have done with the self-employed”
Would starting in 2025 be reasonable?
It would be reasonable, but we are still in full negotiation.
The maximum Spanish pension is not one of the highest in Europe, which country do you think of when you raise it?
In many countries there is no ceiling, so there are very high pensions resulting from very high contributions. We want to maintain a logic of a certain ceiling to maintain solidarity in the system. But I think that, from the current 39,000 euros a year, it would be reasonable for it to rise between 15 and 25% at the end of the entire process, remember that it will be gradual and over decades. We are adjusting it.
Do you expect opposition from employers? All this implies a higher cost for them
If we really want Social Security to be sustainable, as it is, revenues have to grow at the same rate as expenses. Until now, in general, it has been like this, but it has not been strictly done year after year. There have been years, like in 2013, that with a negative IPC the maximum bases were raised by 5%. And I don’t remember many complaints. We want to generate predictability and that companies and citizens do not have to be aware of each Budget law every year to know how much they will rise.
A year ago, when they negotiated the increase in quotas of 0.6 points for the pension piggy bank, the MEI, the employers got off the hook. Why do you think you will now get their support?
We thought that they were going to understand it and at the last moment it was not like that, although they had participated in general agreements in which it was said that the sustainability factor had to be replaced by something equivalent, which is the MEI. This increase of 0.6 contribution points does not change the situation of labor costs in Spain. It means going from a labor cost per hour of 22.9 euros to 23 euros. And the average labor cost in Europe is 29 euros. It does not change the competitiveness of companies at all.
But if that change involved a much smaller cost increase, why will he now get their support?
I think that what must be understood is that in Spain we should aspire to higher pensions, linked to solid contributory careers, which is what is behind this modification. It gives predictability and avoids surprises in the future from ad-hoc modifications without agreement with the social agents.
“You have to understand is that in Spain we should aspire to higher pensions, linked to solid contributory careers”
The other leg of the reform is the extension of the calculation period. Up to how many years?
We are discussing it, I prefer that this be substantiated first in the social dialogue and not anticipate anything.
How many future pensioners and whose profile will benefit?
With current data, we calculate that around 30%, although all workers will benefit from a system that better protects their pensions against events during their working career that are beyond their control and that alter their contributory career. On the other hand, it will benefit women more, who are the ones who present the most problems with gaps in the contribution.
You have said that the reform will have a neutral effect on the coffers of Social Security. If there is 30% that will receive more pension, who will receive less?
What is going to be done is to reinforce the elements of solidarity in the system; but the effect will be very marginal.
Will they then be those with better salaries? How many will it affect?
Not necessarily. We are negotiating, studying numbers, profiles… Everything will depend on the final result of the negotiations with the social agents.
Intermediate positions of the European Commission demanded that the extension of the MEI from 2032 be automatic. Have you talked to the top managers?
Not yet. We prefer a semi-automatic rule, but we are open to discussion. Before the end of the year we will have it clarified.
In the preparation of the Budgets for next year, what reference of average salary increase have you taken to calculate the increase in income from contributions?
We have used for the entire economy the reference, as a technical assumption, of the increase in salaries in the public function [del 3,5%]. The trend is going in that direction.
“In the Budgets for 2023 we have used for the entire economy the reference, as a technical assumption, of the increase in salaries in the public service [del 3,5%]. The trend is going in that direction.”
Do you think the costs of inflation are being shared equally between wages and business margins?
The data shows no. Wages are lagging a bit, worsening purchasing power, and margins are holding up. That is why corporate tax is collecting so much and that is why the design of the Government’s measures is aimed at mitigating the effects of loss of purchasing power of medium and low incomes and within the business sphere some specific sectors.
Have companies increased prices excessively?
The dynamics of the market is what it is and each one has the ability to transfer prices that it has. From economic policies we have to see what instruments we use to mitigate this price increase for those most affected.
What are the consequences of workers having a general decline in purchasing power?
There is a huge consensus among economists that equity and economic growth are not opposing elements. This contrast is no longer defended by almost anyone, only ultraliberal redoubts that in Spain unfortunately have a lot of resonance in public opinion. Better income distribution goes hand in hand with higher and more sustainable economic growth.
You have defended predictability in the previous pension reform. Will it establish by law that the minimum non-contributory pensions rise each year according to the CPI, like the rest?
We have a commitment and we are working to have some type of metric to update those pensions. It is not in the reform block that we have to close before December 31st. We will examine it later.
How many workers of migrant origin will be incorporated into the labor market after the latest reform of the immigration regulations?
It is very difficult to make forecasts. At the moment, with the data available, we have received more than 4,500 applications for residence permits to train in the few weeks that the instruction has been in force.
“We are in an uncertain environment and the Spanish economy is resisting extraordinarily well”
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After the latest forecasts from Airef, is a technical recession in Spain likely?
I see it as unlikely. I have read your report and the government’s forecast for economic growth is really in the center of the range that Airef uses. Specific forecasts are of little interest in the current context. The Authority also says that the Government’s revenue forecasts are very cautious. We are in an uncertain environment and the Spanish economy is resisting extraordinarily well. That is so and it is manifested in growth such as employment, we have 700,000 more employed so far this year. Contracts show medium-term expectations and these are good. The measures to mitigate the price crisis are working. And it is that the Spanish economy has come out of the pandemic in a very healthy way.