The latest reform of the pension system, which was unanimously adopted within the Toledo pact in 2021, as is known, includes an automatic annual review of it according to the CPI. At the time, we could not have imagined that less than two years later, as a result of the pandemic and the brutal war in Ukraine, we would enter an economic crisis that would push inflation around the world to levels not seen in recent decades.
The crisis in question, which is one of the supply calls, is not due to insufficient demand, but to the disproportionate increase in energy prices and bottlenecks in many production processes. We are in a state of stagflation that we were already exposed to in the 1970s, characterized by high inflation as well as a frightening combination of stagnation or stagnation. The technical recession has reached leading countries such as Germany and the United States, and expectations for a rapid recovery in Spain have waned.
At this point, the government has prepared a budget project that includes the aforementioned commitment: Finance Minister María Jesús Montero has already announced that pensions will increase by 8.5% in 2023, the largest increase in history. The item will increase by 11.4%, with a further increase of approximately 20,000 million euros and benefits will reach 190,687 million, accounting for 39% of the total expenditure projected in the Budgets. The proposal includes linearly increasing both premium and non-contributory pensions by the percentage indicated above. Of course, practically no working wages in 2023 will be appreciated by this amount, which squeaks as soon as comparisons are made. Eade’s sociologist Jorge Galindo wrote in a tweet, “PGE 2023 brings in an additional €19,500 million in pensions and an additional €390 million in scholarships. These are the current priorities of our welfare state.” It is easy to imagine the excitement this statement has created on the networks, and an objective figure provided is that the items for youth promotion amount to €12,741 million, which is only 3% of the total, 15 times less than the expenditure on pensions.
Many of us certainly share the underlying maxim of this issue: The quality of a democracy can be measured by the way it treats its elders. It would be unfair for those who retire after decades of service to society, moreover, if they have to settle for a meager pension, which declines each year, causing their standard of living to deteriorate from vital slope to deadly over time. towards completion.
It could be argued that there is an easy solution to the problem: let’s increase the lowest pensions and freeze (or reduce) the highest. The proposal has a problem: the amount of pension is related to the contribution that the employee is willing to pay during his working life, so if we do not maintain the degree of benefits, no one will choose to pay more quotas to better finance the elderly. age.
In addition, the situation presents us with a disturbing vicious circle: We are investing large sums of resources to finance pensions (according to an analysis by the Economic Research Foundation) when young people are in free fall, in a state of increasing delay and difficulty. When applied, Hispanics aged 18 to 35 today earn up to 50% lower wages than workers of the same age group in 1980). In other words, we are investing more and more in pensions, while abandoning those who really have to finance the system to their fate: young people, now doomed to a vicious mileurismo, with no prospects of emancipation or decent housing, far less. maintaining a reasonable birth rate.
The above shows that certain balances need to be maintained between the country’s payroll bill and pension spending. What needs to be discussed intensively and permanently within the Toledo Pact, not hastily, but through a well thought-out State agreement with virtual founding value.
Source: Informacion
Ben Stock is a business analyst and writer for “Social Bites”. He offers insightful articles on the latest business news and developments, providing readers with a comprehensive understanding of the business world.