In 2007 it allocated 8.4% of its GDP to pay retirees, but that figure is set to rise to 15.1% by 2060, while the EU average will be 12.6%. At present in Spain there are four tax payers for every senior citizen, but due to the aging population and low birth rate, in 2050 it apparently will shrink to two to one.
The Bank of Spain heated up the debate by issuing a report a few weeks ago urging the immediate reform of the system. They seem to be of the “never-waste-a-good-crisis” school, which means pushing bitter medicine through congress during hard times when people are more off-guard. The EU and the Spanish government, on the other hand, feel it would be wiser to wait for the crisis to blow over before acting.
In any case, change does seem to be in the wind, so different ideas are being bounced around such as encouraging people to have more children by making it easier for women to combine motherhood with work, but the articles I read gave no details about that. Other ideas sound more ominous, especially when the “f” word (“flexibility”) is used. Despite having positive connotations, this term is a common euphemism for having to make sacrifices and lowering your quality of life.
So the movers and shakers are speaking of “flexible pension schemes”, by which they mean you’ll have to work longer, or retire later, to be eligible for a reasonable pension. Another idea the Bank of Spain put forward, but which sounds surrealistic to me (if I understand it correctly), is that your pension will depend on your life expectancy. This seems to suggest that if you’re a hale and hearty 65-year-old, you’ll get a low pension, which will probably kill you. Perhaps this is meant to be an incentive for us to opt for a shorter, yet much more intense life; but this will probably just drive up health care costs, another conundrum on the Spanish horizon.
At any rate, after careful consideration of the various points of view, I would like to weigh in with a few ideas of my own. First of all, as I’ve already noted in a previous post, free lancers (autónomos) pay in much more to Social Security than businesses do; for example, as a free lancer I contribute about 250 euros monthly, whereas for doing the same work for an academy, they would pay less than half of that for me. So why not make businesses pay the same as free lancers do?, which is really only fair. I’m convinced this measure alone would go far to fatten the public coffers.
My next proposal is to bolster childbirth by subsidizing parenthood: the more kids someone has, the bigger the tax break the company gets. I can envisage a situation where ardent couples work overtime at improving their job prospects. Also, BOTH parents would be REQUIRED to take paternity leave, which would greatly reduce the discrimination against women. Parents would also be exempt from working the ridiculously long hours which is so common here.
My last proposal is to get the economy back on its feet and cut unemployment. This will take some doing, but Spain is particularly strong in renewable energy such as wind power, and in infrastructure construction such as high-speed trains, all of which fit in neatly in a world finally waking up to the reality of climate change. And for the moment at least, Spain’s finance sector is holding up well; and there are notable success stories such as Amancio Ortego’s Inditex.
If there are abundant good jobs available, and along with Spain’s sunny clime and mellow beaches, skilled workers will be drawn here like bees to honey. So if we can implement these measures, and just get businesses to be more flexible, I’m convinced that in no time at all Spain will enjoy a robust Social Security system without any undue sacrifice on the part of ordinary working people.