The Government already assumes that inflation will bring with it the highest bill for the revaluation of pensions in history. With the CPI touching 9% last May, the rise will cost the public coffers more than 10,000 million euros. However, the Ministry of Inclusion, Social Security and Migration hopes to deal the blow to the budget of the body in charge of paying pensions in Spain with the greater volume of social contributions that the system is entering with the strong improvement in the labor market.
Until last April, the volume of income received by the system through transfers of contributions from employed workers grew at a rate of 8.9% compared to the same period last year, that is, 3,537.2 millions of euros more.
And it is this data on which the guarantee that Minister José Luis Escrivá gives pensioners about the revaluation of benefits for 2023, which “obviously” will be done according to the CPI, is based.
In fact, Minister Escrivá took advantage of this issue during the informative breakfast held by the New Economy Forum in Madrid on Monday to ensure that the debate that has been generated on the financial impact of the pension reform, which by law links the increase in pensions to the CPI “is artificial” and “is not in the rest of Europe”.
Thus, the Government does not leave a spigot open to possible modulations of the revaluation, as recently requested by the Bank of Spain in its annual report. Precisely Escrivá alluded during his speech to the latest data released by the supervisor about the advance of the CPI, which he hopes will persist during the second half of the year. Although Escrivá did not pay attention to this part of the projection made by the entity led by Governor Pablo Henández de Cos: «The projections of the Bank of Spain of inflation are the most reliable. But it is difficult to do them in the short term. For 2023 and 2024, it projects price stability of around 2%.
Thus, Escrivá trusts in an improvement of the parameters to prevent the budgetary blow that the rise in pensions will have from undermining the financial capacity of Social Security. On the one hand, he hopes that the price increase will be a temporary issue, and he also hopes that the improvement in employment will persist as the main ally for the balance of public accounts.
«We have closed in 2021 with a deficit of 0.9% and this year it will be 0.5%. Income grows much faster than spending, at a rate of 8%. Airef has just made a projection, which is the authority that can do it, and in 2024 it projects a 0.3% deficit in Social Security,” Escrivá pointed out, adding that the discussion about whether it is feasible and advisable to maintain purchasing power of this group “is biased and not very rigorous”.
Escrivá even referred to measures that are being addressed in the rest of Europe on the income of the elderly, and recalled how in Germany a 5% revaluation has been signed for payments and how in France the Early rise in retirement pensions with a 4% increase to deal with the current rise in consumer prices.
In this sense, Escrivá confirmed that the agreement reached with Bildu for a 15% increase in non-contributory pensions for the coming months, until the end of the year, will be addressed, which will entail increases in the amounts of between 60 euros and 100 euros per month . Social Security sources confirm to ABC that the “logical” thing is for this item to be included in the royal decree expanding measures to alleviate the effects of the war, which should see the light of day before the end of the month.
After the controversy that arose as a result of some statements by the minister about the “lack of sophistication” of a Bank of Spain report, Escrivá justified that his intention is to “add elements for debate and reflection.” «When one looks at the countries around us, how economic thought has evolved, in some areas the dominant opinion, the published opinion, is a bit old, stagnant, it is the usual recipe. There is a lack of freshness, a lot of freshness, in Spain’s economic reflection on many issues,” the minister stressed. Escrivá lamented that the opposing opinions generate »friction« and has stressed that his intention is only to generate debate.
At this point, the minister assured that “nobody in the world defends lowering taxes to combat inflation”. And he assured that the objective and concern of developed countries is to protect the most vulnerable. “We’ll do it for as long as it lasts. Economic policy priorities are changing. The concern is how to protect income“, Escrivá assured.
The other most urgent point of the cabinet led by Minister José Luis Escrivá, that of the self-employed reform, will have to wait to see the light. In addition, sources close to the negotiation see possibilities of agreement in the coming weeks once the electoral hustle and bustle in Andalusia passes.
It should be remembered that the new contribution of the self-employed for real income is one of the milestones committed to Brussels in order to receive the more than 70,000 million euros of reconstruction funds that will arrive in the form of a grant to Spain. And of which at least 6,000 million expected for the second half of the year are conditioned, among others, to this point of the self-employed reform.
Improvements in the minimum vital income
In other matters, the Government acknowledged continuing to work on improvements on the provision of the minimum vital income that will speed up the process of granting this benefit and its effectiveness in boosting the lives of the thousands of beneficiaries at risk of exclusion. Escrivá thus announced the approval “in the coming weeks” of two important measures to “complete the minimum vital income.” Specifically, he pointed out that very soon they will reach the Council of Ministers “the social seal, which will facilitate collaboration with companies to favor the inclusion of the beneficiaries of the benefit, and the employment incentive, which will encourage the recipients of the benefit to join to the labor market”.
The minister underlined the significant scope of the benefit, which has not yet been two years old, reaching almost half a million households and almost 1.2 million people. The minimum income “has been a challenge from the management point of view if we take into account that in these almost two years nearly 1.9 million applications have been processed, a figure higher, for example, than the 700,000 applications for pensions that reach Social Security each year”.
