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The CEOE withdraws from the negotiations for the new ‘Intergenerational Equity Mechanism’, which will replace the sustainability factor designed by the PP
The employer’s negotiators CEOE They have risen this Monday from the table on pensions leaving behind a ‘No’ to the latest proposal of the minister Jose Luis Escrivá. Barring an unexpected turn of events and a last-minute call that may reverse the situation, the Government must approve the new ‘Intergenerational Equity Mechanism‘without the approval of businessmen. The employer’s association has made its position known through a statement, in which it has synthetically argued the reasons that have led it not to continue negotiating and not be a participant in the increase in social contributions that Escrivá intends to feed the pension money box .
Despite the idyll that social dialogue has experienced in Spain since the pandemic began, it is not the first time that the bosses stand before a proposal from the Executive. In the negotiations of the ertes, no matter how agonizing most of them, businessmen have ended up supporting all extensions. They also gave ‘yes’ to the new law of telecommuting, as well as the ‘law rider‘. However, in those negotiations in which the result supposes a direct increase in costs for the business balance sheets, the bosses have tended towards ‘no’. Said ‘no’ to the new equality regulations, which oblige, among others, the firms to prepare a salary register. The most recent refusal was at the end of September, when the CEOE rejected the latest minimum wage increase. And now they have said ‘no’ to an increase in social security contributions. The CEOE president already warned a few weeks ago: “We do not have the right to veto, hopefully. […] If we have to say no, we will say it and explain it. ”
The bosses have refused to support this block of the pension reform, but this does not mean that they will leave the table for the rest of the issues and will continue negotiating -and supporting or not- the successive proposals that the Government seeks to reach a consensus with them.
‘No’ to bear more costs
The main argument publicly adduced by businessmen for not supporting this part of Escrivá’s reform is economic. In the same way that a month and a half ago they opposed supporting an increase of 15 euros in minimum interprofessional wage, this Monday they have said ‘no’ to assume part of an increase in the social contributions of workers. Escrivá’s latest proposal proposes to increase the quotas by 0.6 points, which depending on the salary of each employee is one figure or another. For an employee who charges 1,000 euros gross, this translates into an increase in labor costs of just under 5 euros. If the worker charges 2,000 euros gross, the increase is close to 9 euros.
“CEOE and Cepyme have stressed that increasing social contributions and making the greatest burden fall on companies has negative effects on employment and goes in the opposite direction to what the public pension system needs,” argued the employer.
‘No’, because it can put growth at risk
Another argument related to the increase in costs that employers use to justify their position is that this may be to the detriment of the growth prospects macroeconomic. Just as they considered that the rise in the minimum wage could weigh down the evolution of the START, now consider that if companies pay those 9 euros more on average per month they will have less room to grow. “This is not the time to increase business costs and put recovery at risk by eroding productivity and competitiveness of companies,” says the employer.
The current forecasts for 2021 are for broad economic growth for Spain, although in recent months several organizations have moderated their expectations. The European Comission last week reviewed its figures and estimates that the Spanish economy will grow 4.6%, almost two points below the Government’s estimate.
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‘No’, because they don’t see it right between generations
Beyond costs, another reason given by businessmen to justify their ‘no’ to Escrivá is how they are distributed at the intergenerational said costs. “The Executive’s proposal has little of intergenerational since it loads all the efforts on current and future workers, especially on the youths“, has stated the CEOE. What the Government proposes is to introduce a kind of rate for a specific period – 10 years – to feed a piggy bank to pay tomorrow’s pensions. Once those 10 years have passed, if the spending on pensions It has not exceeded the forecasts that the Executive will review periodically, this rate will disappear.
The pension system in Spain is based on the logic of intergenerational solidarity. That is, the worker does not save part of his salary in an individual piggy bank and when he retires he collects his pension from said piggy bank – this system is known as’ de capitalization‘-, but contributes during their working life to a common fund through which pensions are paid. That is, while you work, you pay your parents’ pensions, so that later, when you retire, your children pay their retirement.
Escrivá’s approach is to tax all workers a little more for 10 years, regardless of their age, to guarantee the future viability of the public pension system. Since when all the ‘baby boomers‘retire, there will be a higher percentage of pensioners than there is now. And, in many cases, with better pensions. The Government chooses to tax everyone a little more now than to cut the pension of retirees based on their life expectancy; just as the previous reform of the PP foresaw.
The reasons given by the employer to argue its ‘no’ to Escrivá’s latest proposal are solely economic. The president of the CEOE, Antonio Garamendi, he repeats regularly in his speeches and defends the autonomy of the employers to defend the interests of businessmen. Apart from political and party disputes that may entangle economic debates. The current negotiation of pensions is no exception, especially at the current point.
What Escrivá proposes is a frontal and direct amendment to the reform approved by the PP in 2013. The popular ones bet on propping up the viability of the pension system through spending. That is to say, they foresaw that the State would have to spend more when the ‘baby boomers’ retired and, to avoid this, they proposed that future pensioners would charge less. To date, the PSOE-United We Can Government has proposed not to cut pensions and to enable mechanisms to enter more money. A paradigm shift that, if it had the support of the CEOE, would not be well seen by the PP. Well, it would be to support the opposite of what they defended.
Reference-www.elperiodico.com