The Government uses the pension agreement to pressure the PP for its economic uncertainty

The Government has had a much tougher start to the year than expected, from a political point of view, and needed good news to cling to. The agreement within the coalition, with the unions and especially with Brussels for the pension reform, approved this Thursday in an extraordinary Council of Ministers, seems to have responded to that milestone that La Moncloa was looking for to talk about management and progressive reforms instead of internal divisions. The motion of no confidence next week and a possible housing agreement in the coming weeks could finish off this change, according to what they trust the Executive. The Government also has a new aid package pending against inflation that must be approved before the current one declines, at the end of June. There could come more measures against the rise in food prices.

But for now, the Government has concentrated all its machinery on the pension reform, which has been the first great piece of good news in quite some time, and as such was received by the Council of Ministers. Everyone, including the Podemos ministers, who have explicitly supported the agreement, applauded José Luis Escrivá and his star reform at the end of the meeting, something very unusual in a meeting that, according to several of those present, is becoming more and more technical and less political.

The Executive gives maximum political relevance to the pension reform for many derivatives, especially the most specific, because according to the Executive it supposes a guarantee of sustainability of one of the great pillars of the welfare state for many years. Spain is completely contrary to that of France, which is approving a large adjustment in pensions that is causing enormous wear and tear on Emmanuel Macron and could bring down the government. “France has not addressed the pension system in decades, and for this reason now they have to make an approach through cuts. In France there are 42 privileged pension schemes, something that Spain eliminated years ago”, Escrivá pointed out to explain why both countries are going in the opposite direction.

The coalition carries out a positive reform, without cuts, agreed with the unions, and above all endorsed by Brussels after a long and very complex negotiation in which Escrivá has had to fight in person and with his team to convince the technicians of the European Commission that the numbers add up. Even so, they have left an evaluation for three years to see if adjustments have to be made, and that is where the PP clings to criticize it.

This framework of the pension reform helps the Government to launch positive messages towards one of the most politically sensitive groups: the almost 10 million pensioners, a population that has a very high percentage of electoral participation, which can decide elections in one direction or another. another and who is seeing in these first months of 2023 how their pensions increase by 8.5%.

But the reform also serves the Government to take the PP to a terrain where La Moncloa believes that Alberto Núñez Feijóo moves much more uncomfortable: that of the economic alternative. The PP leader rejects the reform, says it is a patch, and points to a possible vote against it in Congress. But he does not clarify what he would do in such a sensitive matter if he came to the Government. If it did, it would have to point out where it would cut expenses if it does not agree with the line of increase in income that Escrivá has proposed and the employer rejects, because it is largely focused on a moderate increase in contributions, which in any case would remain well below the European average, as demonstrated by the minister with clear graphs after the Council of Ministers.

More information

Feijóo is in this with the employers and the PP is much more comfortable than a year ago, when the businessmen agreed on the labor reform with the Executive and left the popular offside with their vote against. But the leader of the popular cannot put any adjustment on the table in an election year, so it is likely that he will remain indefinite. The Government takes advantage of this framework to recall the failure of the last pension reform, that of Mariano Rajoy, which involved a very strong adjustment because they only increased 0.25% per year, something that would have been devastating at a time like this, with high inflation. In fact, Rajoy himself, shortly before being dismissed by a vote of no confidence, broke his own reform and agreed with the PNV to raise pensions by 2% so that the Basque nationalists would support the Budgets.

Sánchez and Escrivá are prepared to remind the PP of Rajoy’s strong adjustment in 2013 and claim that the reform carried out by the progressive government goes in the opposite direction. In addition, the reform has the strength to go to the ideological combat with the PP, since as Escrivá explained, it has a great redistributive and equity component, by increasing the contribution of the highest incomes. “We are ensuring the sufficiency of the pension system, we make it more equitable and sustainable,” he assured. The minister is convinced, and he explained this at the press conference, that Feijóo is now criticizing the reform, but if he came to the Government he would maintain it, as Rajoy did with Zapatero’s 2011 reform. “The PP did not vote for the 2011 reform, he criticized it, and then he maintained everything when he came to the Government. When a reform is well done and has sufficient support, it tends to last. This is a reform for many years that brings a lot of peace of mind to our pensioners”, Escrivá concluded.

The minister insists that the increase in contributions would be like a salary increase of 1.6% in 30 years, something perfectly acceptable to the companies. “The cost per hour worked is 23.4 euros in Spain. In Italy it is close to 30 and the euro average is 33.8. After 30 years. The total increase with this reform is 37 cents, it will remain at 23.8, well below the average. This reform does not endanger the competitiveness of Spanish companies nor is it going to jeopardize the proper functioning of the labor market. This first quarter of 2023 we will have the best employment data in the historical series”, Escrivá concluded.

Now the parliamentary process begins, where the Government hopes to have a large majority and thus once again leave the PP with Vox in opposition to a model that Brussels supports and that implies very positive messages without the popular ones showing their alternative for the moment because it could mean adjustments, precisely the framework in which La Moncloa would like the long electoral campaign to move, which has practically already begun and will last throughout this year.

Follow all the information on Economy and Business on Facebook and Twitteror in our weekly newsletter

Five Days agenda

The most important economic appointments of the day, with the keys and the context to understand their scope.

RECEIPT IN TU CORREO

Subscribe to continue reading

Read without limits