Newly agreed pensions mechanism aims to collect €48 billion in ten years

The Spanish government and trade unions have come to an agreement over the future management of state pensions. 

José Luís Escrivá, the minister for social security in the Spanish cabinet, estimates that an increase in contributions of 0.6% will raise €48 billion in the ten-year period between 2023-2032. 

The Socialist minister explained that the current state pensions pool reached as high as €68 billion in 2012, but since then has been emptied and now stands at around €2 billion. 

Escrivá estimates that thanks to the new Intergenerational Equity Mechanism agreed with unions, this figure will be able to return to €50 billion in 10 years' time. 

The 0.6% rise in contributions will come jointly from companies, which will pay 0.5%, and from workers, who will add 0.1%. 

The minister also denied that the increase could affect the creation of new jobs, and rejected the idea that Spain had "a problem of labour costs." 

According to Escrivá, a comparison between Spain and surrounding countries shows the cost of labour, "which is what marks the competitiveness of companies", is cheaper in Spain.

This money will be used to deal with decades of “stress" for the system, after which, the situation will be "more manageable."