The pension reform does not guarantee the sustainability of the system and hits what has been the most precarious generation in decades.

The pension reform does not guarantee the sustainability of the system and hits what has been the most precarious generation in decades.

The pension reform does not guarantee the sustainability of the system and hits what has been the most precarious generation in decades.

Escrivá turns his back on young people

The Austrian philosopher and statesman said peter drucker that the best way to anticipate and predict the future is to create it, alluding to the importance of assuming the present responsibly in order to build a future with guarantees.

probably the structural reform of the pension system It is one of those policies that requires more long-term perspective, imagination and inventiveness to reconcile the sustainability of the system (the Social Security contributory deficit exceeded 30,000 million euros in 2020, a figure equivalent to 2.7% of GDP ) with the expectations of pensioners, present and future, and with the dimension of progress and intergenerational equity.

However, the unilateral solution finally adopted a few days ago by the Government, with Minister Escrivá at the head, and the unions, without the agreement of the employers, by which it is agreed to increase social contributions by 0.6%, 0 0.5% charged to the employer and 0.1% to the worker, during a “cyclical” period of ten years to finance the increase in spending on pensions derived from the retirement of employees. baby boomersgoes in the opposite direction.

According to Rafael Domenechhead of Economic Analysis at BBVA Research and one of the most authoritative figures in our country in terms of pensions, this decision “does not introduce any intergenerational equity mechanism; it does not guarantee sustainability, it reduces its contribution, and it places the greatest expense on future generations”. In other words, it paints a bleak and gloomy picture for the youngest (even more).

Why? First, because we speak of intergenerational equity when it comes, ultimately, to plus labor taxes in a context in which Spain has 14.6% general unemployment and more than 30% youth unemployment, the highest figure in the whole of the European Union, according to Eurostat.

The rise in prices hits the competitiveness of companies and it makes job creation extremely difficult in the face of an uncertain and less intense recovery than initially forecast. A recovery conditioned, among other factors, by the supply crisis, energy prices and inflationary tensions, after a year 2020 in which Spain experienced the biggest recession in the eurozone and more than 200,000 companies were close to bankruptcy or in a situation of insolvency, according to the INE.

From Escrivá, former president of AIReF and one of the most technical ministers of the Government, a less easy solution was expected and more at the height of his career. Unfortunately, it seems that, once again, the most ideological side of the Government has prevailed, leaving aside any hint of technical criteria.

The reality is that the true benchmark for achieving intergenerational equity and, therefore, for guaranteeing a decent future for young people and pensioners is employment. It is not a question of widening the collection base by charging the bill on existing workers and companies, but of favoring the creation of companies and reducing the high unemployment rates, which during the last 30 years have doubled the community average.

Escrivá expected a less easy solution and more at the height of his career

Likewise, it is key to stop the leakage of income derived from the high levels of submerged economy which, according to the union of Finance Technicians (Gestha), costs Spain 270,000 million euros a year (20-25% GDP).

In addition, part of this shadow economy is given in tax fraud, which is close to 100,000 million euros, according to statistics from this same union. All of this not to mention the deficient active employment policies which, as the Businessmen’s Circle recalls in its recent report ‘An efficient labor market that generates stable employment’, have an “immense improvement path”.

Now, if the increase in contributions affects those who do not have a job, since it makes it difficult to hire them, The other side of the coin is that those who hold more precarious and unstable jobs (young people) will see their purchasing power decimated and with no expectation of progress. It should be remembered that the Spanish employer’s contribution to contributions is equivalent to 9% of GDP. This means that companies pay 1.7 points more than the average of employers in the EU (where the average weight of the business contribution is 7.3% of GDP), according to the ‘2019 Report on tax trends in the EU’, prepared by the European Commission.

Finally, the agreement between the Government and unions it is harmful to young people because it does not comply with Europesince it squanders the two guiding principles by which a structural reform of this scope should be governed.

In the first place, the mainstay of social dialogue, since without the addition of businessmen and a good part of the parliamentary groups, it does not presume to be a lasting reform, which throws up even more uncertainty, an ingredient that is not recommended for the set of actors involved, in addition to conveying a message of little credibility to the rest of our European colleagues at a time of great dependence on community funds through the program Next Generation.

Second, because the increase in contributions to companies and workers is not equitableintergenerationallysince the hike unilaterally agreed with the unions is a final quota to face the tensions of spending on pensions for those born between 1957 and 1977, but it does not guarantee more or better future pensions for today’s young people.

In short, the reform of Escrivá it’s just another patch than a reform that does not guarantee the sustainability of the system and puts more stones in the way of the most affected and precarious generation in decades. Do we come out stronger?

*** Alberto Cuena is a journalist specializing in economic affairs and the European Union.

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