• With the CPI, the Government does not guarantee now to raise pensions in December as promised for 10-N

The Social Security system has one of its greatest challenges in the notable aging of the Spanish population. In fact, together with the political decisions on issues of rises and indexations to the CPI, they are the factors most likely cited by economists and experts. And yet, the Foundation for Applied Economics Studies (Fedea) notes that, in reality, the element that has most deteriorated the financial health of the system is the strong moderation that wages have suffered .

"The analysis of the period 1985-2016 reveals that the financial situation of the contributory pension system has deteriorated over time due mainly to two factors. As one would expect, one of them is the aging of the Spanish population, which has resulted in a gradual increase in the dependency rate for the elderly , or what is the same, in a decrease in the number of people of working age who have to finance each pension with their social contributions, "explains the study Productivity and pensions signed by Ángel de la Fuente, director of Fedea and one of the greatest connoisseurs of the Spanish pension system.

And "the other, which surprisingly turns out to be even more important," continues the document that has been published today, " is the sharp slowdown in productivity growth and therefore in real wages, which have tended to stagnation in recent decades. ".

In his study, De la Fuente estimates that between 1985 and 2016, " the financial balance of the system has deteriorated at an average rate of 0.76 percentage points per year ." "The component of the ISF [financial health indicator] with a stronger negative effect on its evolution is surprisingly the deterioration of the wage evolution component, with an annual contribution of -1.36 points that reflects the effects of the collapse of the productivity growth, "he emphasizes.

"The other major negative effect is that which reflects the adverse evolution of the demographic situation, summed up by the elderly dependency rate, with a negative contribution to the ISF variation of 1.10 annual points," he adds.

The strong negative contribution of these factors has been partially offset, the report explains, by three other components. On the one hand, the "improvement in the employment rate that fundamentally reflects the increasing incorporation of women into the labor market "; second, "for a gradual reduction in the generosity of the pension calculation rules"; and finally, "due to an increase in available resources that includes, among other things, the growing contribution of the State to the financing of pension minimum supplements."

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  • Spain
  • Social Security
  • Pensions
  • minimum salary

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