Collective agreements and retirement clauses are moving in the opposite direction to Social Security regulation with a striking rise in retirement premiums before age 65. These clauses, which serve as a tool for restructuring or renewing workforces through economic awards or bonuses, have escalated to reach more than 700,000 workers through one in five collective agreements in force, according to data from the Ministry of Labor and Economy. Social.
This figure is 85% higher than that registered in the middle of the pandemicwhen there were 378,000 employees covered by this clause. This increase reflects a trend in labor aspects that also plan for retirement and is in line with the progressive aging of the active population. “The application of retirement incentives in Spain shows a growing trend, both at the state level and in the field of collective agreements,” says Alberto Novoa, member of the Board of Directors of labor lawyers (ASNALA), in conversations with elEconomista.es.
While the Government has further penalized early exits from the labor market by reforming the public pension system, collective bargaining has taken another path: that of compensation, or single or periodic payments for those who opt for premature exit to compensate for some Pension cuts that can exceed 20% for those who leave their departure more months in advance.
Collective bargaining is made up of the most representative unions in each sector or Autonomous Community, which agree with employers and companies on basic aspects such as salary improvements, the length of the working day and all those aspects related to employment, contracting, training or safety at work, among other points. Last year there were 1,773 agreements signed and registered that reached more than 4.4 million workers, according to the annual statistics of the Ministry of Labor and Social Economy with data registered until June 2024.
There is a specific section that details those clauses that have effect on retirement, understood as a cause of the termination of the contract that does not always meet the age that many have in mind: 65 years of age once 38 years of contributions have been completed, or 66 years and 6 months if this requirement is not met in 2024. Retirement clauses are a mechanism or instrument of the employment policy to be applied in the structure of the workforce.
These clauses serve companies and unions as a instrument for renewal or cost reduction through workforce restructuring as in its most common perception of signaling the end of workers’ working lives. As mentioned, those that reward leaving before the age of 65 reach just over 15% of employees covered by collective bargaining, a percentage slightly similar to that of a decade ago, when the number of workers with incentives for Retirement before the age of 65 exceeded 811,000.
Against pension reform
The clauses provide financial incentives for the worker to retire, something that happens more intensely in the case of early retirements. This collides with the regulations that the Ministry of Social Security has been applyingwhich has further tightened pension cuts for those cases in which early departure is voluntary.
Novoa, member of ASNALA and partner of RocaJunyent, points out the loss of experience in the workforce, as well as the high cost of early retirement in the pension system of these practices due to the vicious effect of the loss of social contributions that the Administration stops receiving.
The application of these specific clauses is not generalized, despite the large number of covered workers or the agreements that include them. “In Spain, the diversity in the application of these incentives reflects the need to adapt to the specific circumstances of each sector and company.” Other countries also apply this tool to manage the transition to retirement under different models.
“Early and partial retirement are popular options, and supplementary pension plans are gaining ground”highlights Novoa. The regulation has also directed social security towards the field of collective bargaining. The best example is the recently created construction plan, which in nine months is already the largest in Spain and was agreed by agreement in 2023.
“Collective agreements play a crucial role in the implementation of these incentives, especially in sectors with physically demanding jobs. However, the coverage and type of incentives can vary significantly by sector and company,” says the lawyer.
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