The contributions of high salaries will rise with inflation plus a surcharge

The criticism of the employers for increasing the maximum contribution bases does not intimidate Minister José Luis Escrivá, who continues with his plans and even goes one step further.

Thomas Osborne
Thomas Osborne
10 October 2022 Monday 22:43
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The contributions of high salaries will rise with inflation plus a surcharge

The criticism of the employers for increasing the maximum contribution bases does not intimidate Minister José Luis Escrivá, who continues with his plans and even goes one step further. He has made it clear that this will be the norm from now on: an annual increase in the maximum bases based on inflation, plus an additional addition. This extra surcharge is the one that will try to agree with the social agents before the end of the year to meet one of the objectives of the recovery plan, the unstopping of pensions. An operation that includes both raising the contributions of the highest salaries and also increasing the future pension that will correspond to them.

What the Minister of Inclusion and Social Security specified yesterday was his intention to increase the maximum bases each year based on prices. That what he has done by 2023 becomes the norm. “It has always been like this, and what we are looking for is predictability,” Escrivá said, adding that it falls within normality. Regarding the harsh statement with which the employers responded when learning about this increase of 8.6% of the maximum bases included in the budgets for next year, the minister said that it was "puzzling and surprising... what we want is to break with a past of continued surprises.

What he did acknowledge is that he did not formally inform the CEOE about this increase. "Perhaps we have taken something that seemed obvious for granted," accepted the Secretary of State for Social Security, Borja Suárez, but insisting that, although there is no established procedure in this process, as in the case of the SMI, there has been talk about the topic.

It is an increase that the Ministry considered part of normality and that if it did not occur in recent years it was due to the context of crisis. In this sense, they recalled that if the maximum bases did not increase in 2020 and 2021, and only 1.7% in 2022, it was because they were times of pandemic.

This increase in next year's contribution for the maximum bases will affect 1.1 million workers, those who earn more than 54,000 euros gross per year. It supposes per employee an increase of about 120 euros per month, of which 100 will be assumed by the employer and 20 by the worker, according to sources from the Ministry of Inclusion. On the other hand, the employer's calculations place it higher, at an annual total per worker of around 1,950 euros.

Precisely, this increase in the maximum bases is one of the elements, although not the main one, that contributes to the 8.4% increase in social contributions that the budgets foresee for next year. 152,000 million euros will be collected in contributions, almost 12,000 million more than the forecast for the end of 2022. A significant part of the increase, 3.8%, corresponds to the rise in contribution bases (of this percentage, 0. 4% is provided by the increase to max bases). Then, two more points must be added that come from the surcharge established by the Intergenerational Equity Mechanism, designed to obtain extra income for 10 years and ensure the stability of the system. And the remaining 2.6% comes from the improvement of the labor market, which entails more affiliates and, therefore, more collection.

This is what it touches for next year. For the following, it is about to start negotiating with the social agents the unstopping of pensions. Escrivá gave a key yesterday. His intention is that the contribution of high incomes increase with inflation, plus a supplement that will be agreed upon. In return, of course, they will also have a higher benefit when it comes time to retire.

It is one of the objectives set in the recovery plan, "the gradual increase in the maximum contribution base of the system, accompanied by an adaptation of the maximum pension", an adaptation that will be made gradually, over three decades , and with advance knowledge so that the social agents can adapt. It is what the Ministry, employers and unions will have to deal with at a future meeting, still without a precise date, and which starts badly, given the CEOE statement last Friday in which it thoroughly charged against what will be the basis of the system: the increase in maximum contributions in accordance with inflation as a starting point, to which other increases can be added.

Meanwhile, Escrivá acknowledged that the discussion with the European Commission on the duration of the Intergenerational Equity Mechanism (MEI), a surcharge of 0.6% on contributions to ensure the sustainability of the system, is still open. What Brussels rejects is that the mechanism expires in 2032, the date on which it is proposed to review it, and take measures that are not specified. "The 0.6% is not in question, but if there is some way to turn it into an automatic mechanism," Escrivá said, stressing that it is what the technicians of the European Commission are proposing, who want to guarantee its continuity and avoid risks that it could be interrupted when its use is still necessary.