The Government is designing measures so that the real age at which the population in Spain retires, now 64.6 years old, approaches the legal age to do so, 65 years and 10 months this 2020 and that will be extended to 67 years in 2027. Minister José Luis Escrivá bet on two ways: toughen early retirement and promote “delayed”, that is, continue working voluntarily after retirement age. This last option is very little used in Spain, the second EU country with the lowest rate of workers aged 65 and over, 2.4%, only behind Luxembourg.
The Government prepares more incentives to voluntarily delay retirement
The employment rate over 65 years in Spain is 2.4%, according to the latest Eurostat data for 2019, compared to an average in the EU of 6.4%. Spain is only behind Luxembourg, with 2.3%, while neighboring countries present higher data, such as France 3.3%, Portugal 11.5%, Greece 3.7% and Italy 5%.
Except in some specific cases, in Spain it is not mandatory to retire once the legal retirement age is reached, but few people choose to continue working beyond that horizon. Beyond the personal decision of wanting to continue working, there are usually two main motivations for continuing to work: trying to increase the amount of the pension to be received in old age and, in the case of workers with very high wages, saving something more in his last years of working career before going on to collect the pension, which will significantly decrease his income since he is hitting a maximum of 2,683.34 euros in 2020.
Current tools to prolong working life include economic incentives to delay retirement, of between 2% and 4% increase in the pension for each year overworked, but that they do not reach 5% of total pensions, according to the data presented by Minister Escrivá in the Toledo Pact Commission. The improved pension can never be above the maximum pension established each year. On the other hand, there is the active retirement, by which workers can combine employment and receive part of the pension (100% in the case of self-employed workers with at least one contracted worker) when they meet certain requirements, such as having exceeded the ordinary retirement age.
The latest annual data from the EPA, from 2019, indicates that workers aged 65 and over accounted for 211,400 people out of a total of 19.8 million workers. The majority are men, 122,800 workers, and 42% (88,600) are workers. It should be noted that just over half of the workers over 65 in Spain are self-employed, according to the figures for the last quarter of 2020, while in general self-employed workers account for 16.5% of all workers in Spain. One of the reasons behind this extension of the working life of the self-employed may be that the amounts of the pensions of the self-employed are lower, which is why increases in delayed retirement are more attractive.
By activity sectors, those with the most workers aged 65 and over are commerce (42,400 people according to the latest EPA), health and social services activities (26,800 workers) and professional, scientific and technical activities (26,700 people) . By occupations, those who extend their careers the longest past retirement age are scientific and intellectual technicians and professionals.
Minister Escrivá has announced that he will promote two lines of action to promote delayed retirement: improve the economic incentives for pension increases and the complementarity of employment and pension that are granted today and, on the other, give more publicity to these tools. The person in charge of the Social Security warned that they are very unknown by the population and believes that this partly explains the limited use of them. Given the increase in life expectancy and the challenge posed by the aging of the population, with a growing weight of the elderly population compared to those of working age, the European institutions call on countries to promote “active aging “, with an extension of working life.
You have to look at the job market
The employed elderly are increasing in recent years, mainly driven by the increase in female workers. “It is a generational issue,” recalls the economist Florentino Felgueroso, given the later incorporation of women into the labor market. The Fedea researcher, as well as the professor of the Department of Economics at the University of Alcalá de Henares Inmaculada Cebrián López, point out to elDiario.es that lengthening working life must necessarily be accompanied by measures that modify some problems in the labor market that they make it difficult for people to stay active later in life. “Trying to adjust what happens after an active life in the labor market will not have good results if what happens in the years prior to that moment is not,” warns Cebrián López.
The teacher and Florentino Felgueroso highlight a fundamental issue to be able to extend the years worked: training throughout the working life. “If from the age of 40 you disconnect, at the speed of technical and technological changes today, you will be totally displaced in the job market after a few years. You will not be able to extend your working life if you did not extend previously the formative one “, maintains the economist, who remembers that Spain is far behind in this sense with respect to other European countries. Training and requalification, both economists warn, can allow the elderly to be repositioned and functions more adapted to their possibilities. “This is essential when there are sectors that lose weight in the economy, as happened with construction and we must see what happens now with the hotel industry,” says Felgueroso.
The Fedea researcher also recalls that in other countries there are formulas, such as the ‘bonus malus’, which “reward the company for keeping older workers or even penalize in case of dismissal” and that could also be explored in the case of Spain . From the UGT they denounce that many companies “expel” people over 50 years of age to replace them with workers with fewer rights and salaries, for which they advocate “reforming the dismissal, to cause it and avoid these situations in which it is possible to fire with little cause “, denounces Mari Carmen Barrera, secretary of Social Policies, Employment and Social Security of the union.
Because another of the main labor problems of workers in pre-retirement ages is the limited ability to return to the job market, in which all the sources consulted agree. Almost half of the unemployed people over 50 are long-term unemployed, that is, they have been in this situation for more than a year. One in three has been looking for a job for more than two years.
The lack of job opportunities at these advanced ages means that for many people who dropped out of the labor market, voluntary access to early retirement is the only way out, underlines Carlos Bravo, secretary of Public Policies and Social Protection of CCOO, for which he asks be very cautious about Escrivá’s announcement to toughen up this mechanism. “What cannot be is that these people are expelled from the job market, I leave them with the subsidy for those over 55 years of age, which is of a very very limited amount (430 euros) and then it makes it difficult for them to access retirement anticipated. This has to be discussed a lot, “Bravo emphasizes.
Although the minister has explained that the new disincentives to early retirement will be focused on higher pensions, the CCOO representative affirms that this group is “a minority” among those who choose to retire before the ordinary age. CCOO opens to review the penalty mechanism, but Carlos Bravo recalls that the beneficiaries of higher pensions, who are less resentful of the penalties under the current system, have contributed very high contribution bases. “These people already have a penalty between what they contribute and what they receive, because the maximum pension is well below their contribution bases,” he highlights.
A transversal vision, which relates the pension system with the labor market, is the premise demanded by all the voices consulted to really articulate an effective strategy that prolongs the years worked in Spain. But also important policies such as care and conciliation measures, recalls Inmaculada Cebrián López, who underlines the need to govern with a gender perspective to avoid further delving into the inequality of pensions for men and women. The salary gap faced by women causes many “to choose to leave the labor market when it no longer compensates them, that is, when the salary received is not enough to cover the costs of staying employed, among other issues, for example , for not having a sufficient salary to cover the costs of caring for dependent people “, exemplifies the teacher.