Officials of the European Commission met yesterday with Social Security technicians to evaluate the legal changes in pensions approved in the second quarter: the reform of employment pension plans for companies; and that of the new contribution model for real income of the self-employed. This was confirmed yesterday by the Minister of Inclusion, Social Security and Migration, José Luis Escrivá, who hoped that Spain will obtain a good grade with these reforms and Brussels will release the part of the European funds conditioned to these legal modifications.
But also the so-called men in black –who met with government officials for just under two hours– also asked about Spain’s plans to complete the pending part of this reform, which can be summed up in two questions: an increase in the maximum contribution bases and maximum pensions; and also in, before the end of the year, finding the most appropriate formula to make the system more contributory, taking more years of contributions to calculate the pension, without this implying generalized cuts, while improving the contribution careers of those who are expelled from the labor market in their last years of working life. For this, Escrivá wants to play with the extension of the aforementioned calculation period but discarding a number of years of worse prices and/or improving the treatment of price gaps.
Likewise, Brussels had already expressed some criticism regarding the first part of the reform, specifically for the design of the intergenerational equity factor that the Commission considers too “semi-automatic”, when it should be, in its opinion, fully automatic in the adjustment of pensions. At this point, Escrivá has also publicly acknowledged in several speeches that he will modify this already approved factor if Brussels so requires after this round of evaluation. Today will be the turn of businessmen and unions with whom the men in black They will also deal with this pension reform.
Meanwhile, the Spanish labor market continues to endure despite the inflationary crisis and the uncertainty generated by the war in Ukraine. This was revealed yesterday when the affiliation data forecast for the end of September was known, when around 40,000 new affiliates are expected (60,000 more contributors in seasonally adjusted terms). This is a very good behavior of the affiliation for a month of September, which according to Escrivá himself, who presented the data, is even “surprising for how much it is raining”.
The minister urged the experts to “reflect on the causes of this resilience that the labor market and the Spanish economy are showing”. Precisely he himself pointed to a couple of possible causes. On the one hand, he said that all economic agents (companies and unions) “think that this increase in inflation is temporary and for this reason they do not modify their vision of the medium term or their investment and contracting decisions.”
While, secondly, he pointed to the “high” profits of companies, which could also partially justify this good performance of employment. Specifically, he explained that he describes business profits as high due to growth forecasts for corporate tax collection, of 2.7%, half a point more than in previous years, said Escrivá. Although, he specified that he does not have enough data to affirm that it is the increase in business margins that is sustaining the occupation.
The expected figures for the end of September are somewhat lower than those of that month in 2021, but higher than the average for the 2017-2019 period, which is the one with which the experts make the comparison, because 2020 and 2021 are years less comparable due to the strong effects of the pandemic and its recovery.
In terms of the quality of new employment, the good rate of gains in permanent employment is maintained, whose stock of workers already represents 83% of the total number of affiliates, ten points more than in January, when the labor reform came into effect.
Since the recovery of pre-pandemic employment levels, in August 2021, 750,000 jobs have been created, among which Escrivá highlighted the advancement of employment in sectors with higher added value such as computing, where enrollment grew by 17% compared to before the health crisis; health, with an advance of 9.4% and scientific-technical professions, which have risen 9.2% compared to before Covid. Precisely this improvement in affiliation in activities with higher salaries is contributing, according to Escrivá, to the system’s income growing by more than 9%, due to the composition effect of contributions.
New Criticisms of Academics
- Accusations. José Luis Escrivá’s criticisms of the academic world are beginning to be recurrent. Yesterday, he acknowledged not having read the Bank of Spain report on possible changes in the calculation of pensions but suggested that the data used was not “as fine” as that of Social Security. He also attacked the Fedea investigator, Miguel Ángel García, for his latest critical report on the reform of the self-employed contribution, reproaching him for not making any reform in the “seven” years he was Director of Social Security Management with the P.P. But García only held this position for a year and a half. Finally, he also considered that the BBVA Research economists make errors in their model to deseasonalize the data, because they include the years 2020 and 2021 in the series, he explained.
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