The cabinet must reconsider the decision that the state pension will increase along with the minimum wage. That was published in a Monday advice of the Council of State. The link with the AOW costs billions, while according to the Council of State that money could possibly be better spent on ‘easing financial problems among the more vulnerable groups’.
It has been agreed in the coalition agreement that the statutory minimum wage will increase by 2.5 percent from 1 January 2023. Initially, the cabinet did not want the state pension to increase, but after a motion passed in the Senate at the beginning of this year, it gave in. In the meantime, after the adoption of that motion, inflation “increased sharply”, according to the Council of State. In particular, energy and food prices have exploded. As a result, the purchasing power of especially low and lower middle incomes is currently under ‘severe pressure’, which ‘justifies a new assessment by the government’, the advice states.
The aim of the increase in the minimum wage is to make work more rewarding. According to the Council of State, however, this argument does not apply to pensioners. They no longer have a job prospects and, unlike other groups, run relatively little risk of poverty. The question is therefore, according to the Council of State, why the livelihood security of all pensioners should be improved. “Certainly now that the effect on the state pension has significant budgetary consequences.”
The government’s motivation for linking the increase in the minimum wage to that of the AOW is therefore not convincing to the advisory body. To refer herein to the Senate motion is ‘insufficient’. The government must make an independent assessment, according to the advice.