The dangerous trend of population aging that has been taking place in European demography since the 1970s has forced EU governments to take somewhat controversial measures and decisions, such as in the field of pensions. While in Spain the Government has yet to approve the second part of the reform committed to Brussels, neighboring France faces the entry into force of changes such as the delay in the retirement age that threaten to unleash a new wave of protests in the street. They are two similar and different cases at the same time.
According to the International Center on Aging, in 1950 only 12% of the European population was over 65 years of age. Currently, one in every 5 people residing in Spain is over that age. According to UN estimates, in 2050 25% of the population of the European region will be over 65 years of age.
If the aging of the population, caused by an increasingly higher life expectancy (81 years in 2019), the low young population (0-19 years), which according to the ‘Demography of Europe’ study prepared by Eurostat was barely 20 % in 2020, we find a collapse in the generational change that leaves the future of pensions in suspense. Faced with this political and socioeconomic crossroads, both the French and Spanish governments have begun a process of decisive reforms in the pension model that Brussels demands.
The Spanish Government, for its part, has begun 2023 by failing to comply with one of its key commitments with the European Commission within the framework of the Recovery, Transformation and Resilience Plan (PRTR): closing the second part of the pension reform by 31 December, so that it could enter into force from January 1.
The second part of the pension reform is delayed
The pension reform comes in a year in which they are revalued by 8.5% due to the skyrocketing rise in prices after the pandemic and the energy crisis triggered by the Russian invasion in Ukraine. Inflation has eased five points since the peak in July, but remained at very high levels, at 5.7% at the end of last year.
However, given the revaluation of pensions, the Government will have to make some modification to be able to cut expenses, since the Social Security System will touch in 2021, for the tenth consecutive year, an imbalance in its accounts. The deficit reached the equivalent of 0.9% of GDP, with a total of 11,192 million euros. This budgetary imbalance has caused the reduction of the Social Security reserve fund. Thus, the so-called ‘pension piggy bank’ has dwindled from the 66,800 million euros accumulated in 2011 to the little more than 2,000 million euros it had at the end of 2021.
According to the National Institute of Statistics (INE), the Independent Authority for Fiscal Responsibility (AIReF) and Eurostat, the weight in the evolution of the Social Security balance of the demographic factor, defined as the ratio between the population over 65 years of age and the population between the ages of 16 and 64 (of working age), play with difficulty in the coming years. Specifically, this ratio would grow from the current 30% to a range between 58% and 61% in 2050.
In light of this situation, the pension system remains in the hands of the Government, which will have to implement reforms to guarantee the sustainability and financial viability of the pension system of the future. Behind this reform a complaining murmur is forming from the population, which increasingly raises the volume by anticipating unfavorable changes in their future retirement.
100% of the corresponding pension, a reform that is still in negotiations with the social partners, who are opposed to the proposal to extend the pension calculation period from the current 25 years to 30 years.
A reform that could cost Macron his mandate
In France, the complaining murmurs have turned into cries of denunciation in the streets, in the face of the pension reform that the French government unveiled on January 10. With these changes, the Executive plans to save 17,700 million until 2030 to balance the pension system in the face of demographic changes.
Among the main measures that have revolutionized our neighbors is the increase in the minimum retirement age from 62 to 64 years. The first affected will be those born on September 1, 1961 years.
With all this Macron has turned all the French unions against him and helped reduce widespread discontent. According to a Harris Interactive poll published on January 2, 54% would oppose the reform compared to 44% in favor. French unions have been on the defensive since Macron was supposed to be sounding out the pension issue.
Tensions have intensified when the Prime Minister, Elisabeth Borne, presented on January 10 all the changes made by the Government. Just a few minutes after he revealed the details of his proposal to reform the retirement system, the unions announced a day of interprofessional strike and demonstrations for next January 19 with the main objective of ensuring that this reform, as Laurent has commented, Berger, leader of the French Confederation of Workers (CFDT), “do not enter into force.”
French unions threaten to paralyze the country
The main union in the oil sector in France has already called a series of successive strikes starting next week, in addition, the CGT has already launched a first 24-hour strike at the refineries on January 19, coinciding with the first day of mobilization of all French trade unions. Next, there will be a second 48-hour strike at the hydrocarbon plants starting on January 26 and a 72-hour strike on February 6.
Emmanuel Macron is facing this crisis in his second term fearing that an outbreak like that of the yellow vests (‘gilets jaunes’), which forced him to reverse the announced rise in fuel prices with the diesel tax . The name of the movement, which brought together social groups of all kinds, referred to the phosphorescent garments that French motorists should wear in the event of an incident on the road.
Historically, the French people have taken to the streets with a force that exceeds that of the Spanish movements. It is for this reason that while the French unions have already taken action to try to break the measure promoted by Macron, in Spanish territory no more protests are expected than those that retirees have been leading in recent years to avoid a reduction in their Rights.