Pension Agreement: Escrivá Has Done What He Could

escrivaSocial Security Minister, José Luis Escrivá

Fernando González Urbaneja | The pension agreement, which the Government and Congress will approve shortly, goes as far as it is possible to go with the current Spanish political scheme. Something has to be done to meet European minimum requirements. But something that alters the current model as little as possible, sustaining the immediate sufficiency of benefits. Not a single step backwards as far as current benefits are concerned.

The sustainability of the system is not an issue to be considered, the measures necessary for sustainability are unpopular, uncomfortable to explain, a sure path to electoral defeat. The Swedish government just gave us a good example. When it tried to reform the rent-controlled system, it was met with a successful motion of censure by forces to the right and left of the government. These are not the times for reforms in favour of sustainable social spending.

Not even for measures to ensure climate or ecological sustainability if they entail social costs or higher prices. If someone else has to pay, let it be the rich, those who avoid or evade, others… renewable energies, but without installations close to home, not even in empty spaces with nothing more than landscape.

The pensions minister, a technician hired by Sánchez to gain credibility in Europe, has done his best, he has gone as far as the government’s status quo allows. The system is not sustainable in the medium term for demographic and financial reasons which are obvious, beyond doubt. But now the question is sufficiency: guaranteeing the purchasing power of ten million pensioners, even improving it, even if in doing that the state has to assume the financing of the deficit. For the time being, debt is not a problem, the ECB guarantees financing, at least while the crisis lasts.

Escrivá is managing to push through the first chapter of the reform book, which has two sides: guaranteeing purchasing power (more costs) and lengthening the retirement age, along the lines of the 2011 reform. To justify the budgetary subsidies for the system, which could distort and politicise it, the argument of “inappropriate expenditure” is used. This is a flexible box where there is room for everything that needs to be put inside.
It is quite clear that medium-term sustainability is compromised, that sooner or later there will be an adjustment in pensions, but the electoral horizon can withstand kicking the reform book forward. Whoever assumes that responsibility will lose the next election, just as the German social democrats lost after the labour reforms at the end of the last century. Macron has withdrawn his proposals on pensions he promised before he won the presidency – this is not the right moment.

The most important thing about the agreement is the agreement itself, rather than its content. It cools the problem, it postpones it; everything has to get worse before it gets better.

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Fernando Gonzalez Urbaneja