The 0.6 point rise in Social Security contributions for common contingencies between 2023 and 2032 approved yesterday by the Government with the agreement of the unions will enter the “pension piggy bank” “about 50,000 million” when it is completed the plan that the employer has rejected.
As defended by the Executive, the mechanism of intergenerational equity of pensions supposes a “small increase” in contributions that, however, will serve to increase the reserve fund, which reached a maximum of 67,000 million in 2011 and now barely exceeds 2,000 million, as recalled yesterday by the Minister of Inclusion, Social Security and Migration, José Luis Escrivá, after achieving the pact ‘in extremis’.
The objective of the piggy bank is to generate a “safety cushion” to address the retirement of the baby boomers, the generation of those born between the mid-1950s and the mid-1970s, and guarantee their pensions.
The recovery of the fund will be borne mainly by companies, which finally will contribute 0.6, 0.5 compared to 0.1 of workers after yesterday’s negotiation modified the Government’s initial idea of charging 0.4 and 0.2 respectively. Currently, the contribution for common contingencies represents 28.3% of the contribution base: companies pay 23.6% and workers pay 4.7% for this contribution. When the agreement enters into force, the contribution for common contingencies will rise to 28.9% of the contribution base, 24.1% corresponding to the employer and 4.8% to the worker.
How does this rise translate into practice? For a contribution base of 2,000 euros, the increase would be around 12 euros per month (somewhat less), of which the company puts 10 and the worker, 2.
The rise has not had the support of the CEOE. The employer considers that raise the contribution of employers and workers Social Security opens a door to future increases either through contributions or through taxes to cauterize the gap between income and expenses of the System.
Escrivá has assured that he does not understand the reasons that have led the representatives of the businessmen to reject the agreement since they have not presented an alternative during the negotiation. That the CEOE is a party influences the European Union, which urges that agreements with an impact on employment include all interlocutors.
In this sense, Escrivá has rejected the failure to comply with Brussels, having closed the rise in contributions outside of employers because it cannot impact employment as Spain does not have “a labor cost problem.”