Hello everyone,
Now that the economic situation is critical, it seems that one of the measures to be taken is to reform the public pension system. Talk about this theme is "politically incorrect", but that is why, to talk about what nobody wants to talk, I will give my honest opinion that I will be making several entries on successive days. In fact, for many years known "unsustainability" of current public pension system and no political , the color that best each has made anything to avoid making the difficult situation. Now, it seems inevitable, take measures for many years not been made and, logically, their cost is much higher.
Understanding how the public pension system is the first step to begin to break down the current situation. The English system is called DISTRIBUTION SYSTEM and its basic operation is as follows: current workers pay into Social Security, creating the future rights to pension benefits while their contributions to fund current payments of Current pensions retirees. In turn, those who are now retired, did in his day the same, their contributions to fund the payment of pensions of pensioners at the time.
So with the current system, so that charge current retirees require contributions from current workers, creating an interdependence between current retirees and active workers, more workers trading more security for the payment of pension by the retiree, the more is listed per worker, more security for the payment of pensions by pensioners and increased pensions to be paid in the future, for the active worker.
The problem arises when in Spain there are fewer people working and more people receiving retirement . Currently, for every two active workers, there is a person who receives any type of pension. In 40 years, back in 2050, without reform the current system, the relationship is reversed: for every active worker, there are two people who receive some type of pension.
"What factors are important to understand the seriousness of the problem ?. Several, but my view would be to highlight the following:
First, the English production model . Spain has based its economic growth in recent years mainly in the construction and tourism, two sectors that do not require much qualification and where a significant portion of the salaries, besides not being very high perceived in "B".
In this regard I give much importance, because at lower pay, less Social Security contribution and, therefore, less revenue for the pension system and less expensive to perceive the future. If we add that much salary is paid in "B" and therefore do not contribute to Social Security, it is easy to understand how much more would raise the system if crop that 22% of English GDP is on economy submerged. those with public responsibilities, they could start thinking about how they should be tax and labor laws to make disappear the reasons that lead to the existence of this unacceptable volume outside the legal economy.
If the production model is based on highly skilled jobs with high wages and therefore with high prices, sustainability system would be much greater and the possibility of replacing those jobs would be much smaller and therefore have greater job stability. Clearly it is much easier to replace a waiter an engineer, earning both the same respect. Clearly, if as an employer I have several candidates for a waiter, I can offer lower pay, less Social Security contributions and even a major part in money "B" and almost certainly will cover the job. It is clear that if I am a computer engineer and speak English, I can afford to say no to many job offers deemed insufficiently paid and even opt to work in large multinational companies with good prospects for promotion and highly paid. That and nothing else, well-prepared people went to work in other countries that value the professional and adequately paid.
And in this issue, as in many others, quality education system should be the starting point . When we as a country unable to articulate, develop and maintain over time, a quality education system, we are condemning future generations to work in poorly paid, low education, also, being of low-skilled are easily replaced by others willing to work for much lower wages.
political Gentlemen, do the favor of transforming the educational system in order to transform the productive system. not forget that the welfare of a society is directly linked to level of training and education of its citizens.
Secondly, Spain is one of the countries with higher life expectancy the world, reaching 82 years for men and 84 for women the . This means that those who receive public pensions continue to do so for many more years, fortunately. It is estimated that by the year 2050, Spain will be the oldest in the world, behind Japan. And this means there will need to spend more public money to pay pensions, but will also have to spend more public money to fund health care they will need our elders.
When you created the public pension system, back in the early twentieth century, the average life expectancy was just over 40 years. Today life expectancy exceeds 80 years and yet the legal retirement age remains the same as in the early twentieth century, ie 65. Something does not fit ..........
When you created the public pension system, back in the early twentieth century, the average life expectancy was just over 40 years. Today life expectancy exceeds 80 years and yet the legal retirement age remains the same as in the early twentieth century, ie 65. Something does not fit ..........
Thirdly, Spain is one of the countries in the world with fewer births . There will be no change in future generations. Today's children are tomorrow's workers and, therefore, who paid their dues will support the public pension system.
do not know any responsible public official when he has had responsibilities government has committed itself to establish a network of nurseries wide and cheap , such that any working mother, to continue their work without to consider leaving their jobs because the cost of care to eat much of the salary he receives. Clearly
having children today is a serious obstacle in the career of many women , and it is clear that many women face this situation, freely choose not to bear children.
I see no interest in promoting part-time contract, which would enter the labor market to a large number of women, supported by its role as a mother with a part-time job.
do not know any responsible public official when he has had responsibilities government has committed itself to establish a network of nurseries wide and cheap , such that any working mother, to continue their work without to consider leaving their jobs because the cost of care to eat much of the salary he receives. Clearly
having children today is a serious obstacle in the career of many women , and it is clear that many women face this situation, freely choose not to bear children.
I see no interest in promoting part-time contract, which would enter the labor market to a large number of women, supported by its role as a mother with a part-time job.
Fourthly, the average effective retirement age is well below the legal age of retirement at age 65. When workers took early retirement with little more than 50 years, with almost 100% of their wages, no one can argue that this is an achievement of the welfare state, but rather a misunderstanding unwarranted abuse of the welfare state. When the savings banks to their employees early retirement from the public money FROB (Bank Restructuring Fund), turns to abuse of the welfare state. When for years and years, all self-employed were listed from least until I was 50 years old, after which they were listed by the maximum in order to collect the maximum pension, trading the minimum years required for it, and not all his working life, he turned to abuse of the welfare state. In the end, all we are going to pay abuse very seriously.
About negotiate do not know why, since 1995, so-called Toledo Pact, should begin by establishing mechanisms to do that practice any worker retiring at age 65 and not before, except in cases duly justified for health reasons.
And if you, all our politicians had the dignity of the regulation ring Pensions and other benefits for former parliamentarians, which allows deputies and senators retire with full pension, having contributed only 7 years and not 35, as happens to any other employee perhaps in the next survey of CIS, the political class would not appear as one of the main problems of citizens, to approve the reforms would have a greater popular support.
And fifth, the psychological element of the issue: the neglect of the vast majority of the population . We strongly believe a pension public when we retire and we propose that could be otherwise. If we are not aware of the seriousness of the problem, we can hardly cope. We do nothing to ensure our future. We firmly believe in the pension and that public confidence, in my view, is supported by a very shaky foundation.
What to do in this situation?, What have other countries such as Germany, Chile and Sweden, when faced with this problem?, Is the extension to 67 years of retirement age the right solution?.
try to answer these questions and give my personal opinion of the topic in the next post you do, it will be next year.
Happy Year 2011 For All.
Regards,
José Antonio
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