Social Security proposes to collect more by raising business contributions to the highest wages 29% over the next 25 years
The Minister of Social Security, Jose Luis Escrivahas brought together the social agents again this Monday to negotiate a new bloc of the reform of the pensionsafter two months of conversations behind the scenes waiting for the CEOE held their elections. The Government has proposed raising from the current 25 years to 30 years the computation period to calculate new pensions, adding the possibility that the two worst years of contributions during this period are discarded, according to sources from the social dialogue. That is, a total of 28 years. The CEOE considers that with these conditions it cannot support the reform, CCOO has called on Escrivá to withdraw the extension of the computation period from its proposal and to focus on raising the maximum contribution bases. UGTFor its part, it expects to evaluate the text this Tuesday in its executive committee.
The government intends to shore up the sustainability of the public system, that is, to guarantee that as much money enters the box as the one that leaves at the end of the month to pay the pensions. The first way of attack that Escrivá has proposed is to modify the system for calculating the amount of pensions. If a worker retires today, Social Security takes the last 25 years that he has contributed, makes a weighted average, and from there it takes the amount of the pension that he will receive. Escrivá wants to change that, arguing that such a system harms those workers who lose their pace during the final stretch of their professional career. Well, with the current system, those who have had a more stable trajectory and a better salary in the final years benefit. According to his numbers, about 30% of future pensioners, those most precarious, will benefit.
Escrivá has also anticipated that the effect on public coffers of this modification will be “neutral“, that is, it does not do it to earn more. This implies that those workers with more stable careers would be harmed, without officially having a quantification of them. Since if more years are counted, the salary of the former is usually lower that of the last and the average leaves a lower result. On the other hand, for a person who in recent years has lost their job and has contributed less or nothing, if more years are counted, they are benefited. Especially if, As the Government proposes, the future pensioner can rule out some of his worst years. The idea right now is to extend it to 30 years, being able to rule out two. Another option that had been considered by Social Security was to increase the computation period to 28 years, being able to rule out one.
The other leg of Escrivá’s plan involves getting more income into Social Security. In the last two reforms they attacked the potential problem of sustainability through spending. The Government wants employers to pay more for workers with higher salaries, because currently there is part of the salary that is not quoted – what is known as the maximum contribution bases. This increase in the maximum bases would affect some 1.2 million workers.
Escrivá’s first approach is to increase the maximum bases by 28.85% between 2025 and 2050, according to 1,154 points per year, in addition to what the maximum base rises each year according to the CPI. A figure very close to the one that Escrivá has considered during the prolegomena of the negotiations, as advanced by EL PERIÓDICO. The Government would collect an additional five points of GDP each year with this measure, an increase in public revenue with little precedent in the last decade. That part will affect the employers and not directly the workers, since they will not charge less for the increase in bases. That point makes it difficult for employers to end up supporting the reform and is currently out of the pact.
To the increase in the maximum bases, the Government intends to add the increase in the maximum pensions, which rise each year according to the CPI. Escrivá’s idea is to increase between 15 and 25% the maximum benefits -today they are in 2,819 euros per month-, in addition to what rises according to inflation each year; according to him, he advanced in an interview in EL PERIÓDICO. The proposal this Monday is to increase the maximum pension by 0.154 points each year, in addition to what the CPI rises.
The CEOE sees the proposal as unacceptable
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“This approach is a starting point, open to new contributions from the social dialogue table, which will meet in the coming days,” insist from Social Security. The negotiating dynamic is that the Government and the social agents will meet every Monday until the reform is closed. The deadline set by the Executive is December 31 to have the reform closed with or without an agreement. Right now the unions are open to negotiations and the employers are out of the agreement. “From the outset we do not see that it can lead to an agreement. In addition, it arrives so late that the role of the social agents is not well understood if it is to be approved within the established deadlines and without there being a political agreement,” say sources from the employer’s association .
CCOO has left this Monday’s meeting qualifying as “insufficient“. From the head office they consider that the Government could be more ambitious when it comes to increasing the business burden. They also miss measures aimed at reducing the gender gap in benefits, such as, for example, greater increases in the pension And regarding the increase in the calculation period, they demand that Escrivá renounce it since they doubt “that it will have sufficient support for its parliamentary process.”