Spain’s left-wing government won the backing of unions to reform the nation’s public pension system on Wednesday, in stark contrast with neighbouring France, where plans to raise the retirement age have led to waves of strikes and mass protests.
The leaders of Spain’s two main labour unions, UGT and CC.OO., appeared alongside Minister of Social Security Jose Luis Escriva in Madrid to christen the plan the union heads both deemed “historic.”
CC.OO. secretary general Unai Sordo said the reform would be key to ensuring pensions for Spain’s retired population, which he said is expected to increase from 10 to 15 million people by 2048. “This is about maintaining a pillar of our social welfare system.”
It’s very different across the border in France, where labour unions on Wednesday held another round of massive street protests against the push by President Emmanuel Macron to raise the retirement age from 62 to 64, a move that he says is necessary to sustain public pensions for the future.
Spain, whose workers already must stay on the job until at least age 65 years, won’t be asked to work longer. Instead, the new deal signed off on by its unions will aim to handle a looming boom in the number of retired workers by increasing the social security costs on businesses for higher-wage earners.
Spain has one of Europe’s fastest ageing populations and one of its highest rates of youth unemployment at around 30 per cent — a cocktail that made tweaking its pension system a must.
A reform of Spain’s social security system was one of the requirements established by the European Union for Spain to continue receiving billions of euros from its post-pandemic recovery funds. Escriva won approval from Brussels to go ahead with the plan last week.
“I want to congratulate the government and above all Minister Escriva for their ability to negotiate with the European Union, because this is a deal that has Europe’s backing and that has enormous importance for our pensions,” said Pepe Alvarez, secretary general of UGT.
Spain’s leading business groups have criticized the plan, saying it will hurt hiring by increasing the burden on companies.
The plan will be given the go-ahead by Spain’s Cabinet on Thursday and then head to Parliament to become law. Its passing would be a much-needed boost for the coalition of Prime Minister Pedro Sanchez ahead of local and regional elections in May and national elections in December, after recent spats between coalition members over the government’s sexual consent law.
Following the 2008/09 global financial crisis that hit Spain hard, the government reformed public pensions so that workers could retire at age 65 if they had worked for 38.5 years. If not, they would have to wait until age 67.
Spain’s average yearly salary is around 28,000 euros ($29,500), just below the EU average and well below the French average of 40,000 euros ($42,000).