Despite the warnings from the Bank of Spain about the increase in pensions and the sustainability of the system, the Government maintains its course intact. Next year they will be revalued according to the CPI, as established by recent legislation, no matter how much prices rise this year. This was reaffirmed this morning by the First Vice President and Minister of Economy, Nadia Calviño, and the Minister of Inclusion and Social Security, José Luis Escrivá. In addition, Escrivá has reaffirmed his confidence that the system is sustainable and has refuted the criticism in this regard that the Bank of Spain formulated yesterday in its annual report.
"There is a lack of sophistication in the analysis of the Bank of Spain", said the Minister of Inclusion, adding that the report does not contain any new analysis and that the quantitative references used are old, from an Airef study from when he was still in office of the tax authority. "I have not seen any new element that makes me change my assessment of the sustainability of the pension system," Escrivá stressed.
If, in order to ensure the sustainability of pensions, the Bank of Spain calls for "automatic adjustment mechanisms that adapt some parameters of the system to the changes that occur in demographic and economic dynamics", Escrivá replies that this is an unsophisticated analysis, when “It has been shown that automatic rules per se tend to fail”, and that is why the intergenerational equity mechanism incorporates more flexible rules.
The mechanism provides for a review within a set period of time if risks of unsustainability are observed, but without establishing what type of measures would be taken, whether they would be in the field of contributions or benefits or both. It leaves it open, a formula that Escrivá defends as more consistent with the experience with long-term automatic mechanisms, which he considers to have demonstrated their inefficiency.
These are statements that the minister has made when presenting the advance data on Social Security affiliation, which show that the good pace of job creation is continuing, with 217,000 new affiliates, with a boost in private employment and an acceleration in permanent contracts, especially among the young.
Regarding the pre-pandemic level, affiliation has increased more in the private sector, to represent 92% of the employment created in 2021 and so far in 2022, especially in sectors such as high technology, information technology and communications.
It also follows the good trend of permanent contracts. 78% of Social Security affiliates in May have an indefinite contract, which is seven points above the average for the months of May in the 2015-2021 period.
Where the change in the hiring formula is most appreciated is among young people. In the 16 to 29 age bracket, permanent contracts are growing at a year-on-year rate of more than 10%, while temporary contracts are down 20%. In this way, the percentage of permanent workers under 30 years of age has increased 20 points compared to other months of May in previous years, jumping from 39% to 59% of the total.
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