The Government has finally agreed to revalue pensions according to the real CPI and has given up on implementing a more complex formula by which retirees would be compensated for any gains in purchasing power they had when there was negative inflation in the following years. This is the concession that the Minister of Social Security, José Luis Escrivá, kept up his sleeve in order to bring positions closer to the social agents.
The pension reform proposal that the minister uncovered a week ago in Congress was like a cold water jug among the unions, who launched harsh criticism of both the content and the way of negotiating, which they described as “inflexible.”
Well, just a week after this, agreement has been reached on one of the key reform issues: how pensions will go up each year. Escrivá had already dropped, both in his appearance in Congress and in the interview granted to this newspaper, that he was willing to eliminate the point of friction that existed on this issue and has done so in the first meeting held by the secretary of State of Social Security and Pensions, Israel Arroyo, with representatives of the unions and employers. Pensions will be updated each year with the inflation of the previous year and there will be no compensation or reduction in the event that the CPI is negative. In other words, retirees will maintain purchasing power and even in specific years when prices fall, they will be able to gain purchasing power, although it will be minimal.
This was confirmed by the Secretary of Public Policies of CC OO, Carlos Bravo, after the meeting, who explained that it was an “essential change to advance the negotiation process on Social Security.”
The pressure from the unions has finally led the minister to accept a simple and clear formula, although it remains to be seen whether it will be based on the average CPI of the last twelve months or that of November, as it was done before the reform. de Mariano Rajoy launched the IRP that led the elderly to minimum increases of 0.25% while the Social Security had a deficit. Of course, there will no longer be any compensatory ‘pay’ if the inflation of the current year is somewhat higher than the rise, according to Escrivá told this newspaper, something that the Executive of Pedro Sánchez had done until now.
Escrivá in this case has given its arm to twist and has substantially modified the revaluation formula that it had initially and that was based on a five-year moving average of the CPI. His goal was for pensioners not to lose, but not to gain purchasing power either, so he wanted to offset the gains of certain years in the following, with minor increases. From there it went on to a formula based on the inflation of the previous year, but which would compensate for the negative CPI in the following three years. And now you agree to the request of the unions and retirees will not have to return the gains in purchasing power.
However, this progress in the pension reform is not enough to reach an agreement, according to the unions, which also ask that the penalty for early retirement not be hardened and that the sustainability factor be repealed once and for all without waiting to implement new one. In other words, completely repeal the 2013 pension reform, according to Carlos Bravo.
This Monday’s meeting tried to iron out rough spots in the social dialogue, since one of the accusations made to the minister is that he has no tables in the negotiation and shows an inflexible position. The unions admitted that there had been “slight progress”, but also some “setback”, so they will continue negotiating. More positive was the position of the ministry, which described the meeting as “very productive” and indicated that they will continue to advance to reach an agreement. In fact, next Monday they will sit at the table again.
The new stumbling block in this first battery of measures is the tightening of early retirement. This Monday, the UGT leader pointed out in an interview on the radio that the Government “must be clear” that it should withdraw this proposal and clarified that 80% of the people who retired in 2019 did so since the strike and that these People, even if an incentive is tried to delay retirement, “they will have no choice but to bring it forward”, so the conditions must be maintained.
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