On October 27, the population of Uruguay, in addition to voting in the first round of the presidential election, will also decide at the ballot box on an issue that has generated much concern: a modification to article 67 of the country’s Constitution, proposed by the largest Uruguayan trade union center to change local pension rules.
The text foresees the end of Pension Savings Fund Administrators (Afap, in the Spanish acronym, private pension bodies), the setting of the minimum retirement age at 60 years (currently it is 65 years for those born after 1977, with transition bands for those born before that) and the equalization of minimum pensions and retirements to the national minimum wage.
The proposal will go to a national plebiscite because the Inter-Union Plenary of Workers – National Workers Convention (PIT-CNT) managed to gather 430,023 signatures so that the decision on it can be taken at the ballot box.
“There is a central issue: privileges versus human rights. It is good to conceive of social security in terms of human rights as a sphere dedicated to the protection of people and not to financial profit. Therefore, it is positive that the people decide on the possibility of eradicating financial profit from social security,” said the president of PIT-CNT, Marcelo Abdala, in a statement released by the union.
The proposal goes against what most countries in the world have decided on regarding social security, given the growth in the percentage of elderly citizens in the population, and generates uncertainty about the future of Uruguay’s public accounts and economy.
A report by the Nobilis brokerage firm, whose figures were published by the Uruguayan newspaper El País, indicated that, if approved, the constitutional change would produce fiscal instability, an increase in country risk, a decrease in private investment and legal uncertainty, among other consequences.
The study found that losses resulting from the measure could total up to US$10 billion, an exorbitant amount for a country whose GDP in 2023 was US$77.24 billion, according to data from the World Bank.
Álvaro Delgado, the conservative National Party candidate in the presidential election (the current president, Luis Lacalle Pou, from the same party, cannot run for re-election because Uruguayan law does not allow consecutive terms), has been campaigning hard for the proposal to be rejected.
“It is not just a change in the system, but a change that could completely destabilize the country’s economic balance,” he declared at the end of August, during a campaign event in the department of Salto.
Delgado’s main rival in the October 27 election, Yamandú Orsi, from the leftist Frente Amplio (Broad Front) of former presidents Tabaré Vázquez and José Mujica, finds himself in an awkward position: although he personally does not agree with the reform proposed by the PIT-CNT, parties in his coalition, such as the Communist and Socialist parties, support the measure.
The Broad Front gave its parties freedom to position themselves on the issue as they preferred.
Last month, during the inauguration of the data center that Google will build in the science park in the department of Canelones, Orsi gave a press conference and spoke about the subject.
Asked about the pension reform, the leftist said that it will be more difficult to preside over Uruguay if the proposal is approved.
“If that happens, we will have to sit down and analyze how we will continue and what the consequences will be,” Orsi said, according to statements published by the newspaper El Observador. “We have to analyze. We will have an extra difficulty,” he added.
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