The researcher of Economic Research Center (Cinve) and master’s degree in Public Finance and Financial and Tax Administration, Gustavo Viñales, carried out an analysis on the plebiscite against social security reform in Uruguay that will carry out the PIT-CNT and considered that “there are economic and social issues that would make it inopportune to go through this process.”
Despite agreeing that the next government should try to “approve a comprehensive reform of the Social Security Systemovercoming the multiple omissions and deficiencies presented by the law recently approved by the Parliament”, Viñales developed his analysis of the union’s proposal, indicating the reasons why the initiative does not necessarily guarantee a better pension system in the country.
The ballot with which PIT-CNT plebiscite a constitutional reform was presented yesterday in the Electoral Court and, in summary, it is built on three pillars: the elimination of AFAP and the individual pension savingsa limit for access to retirement at 60 years and 30 years of contributions, and tying liabilities to the national minimum wage.
For the Cinve researcher, the path chosen by the union center does not take into account that “the formula to reach a comprehensive, equitable and sustainable reformrequires rethinking the current contribution mechanisms of workers, companies and retirees”; for which it will be necessary a wide social dialogue.
The “errors” in the PIT-CNT proposal
Viñales first pointed out what he considers a “serious error”: considering that “prohibiting” the individual savings system In the pension system, the social security contributions of the upper-middle and high-income sectors are directed towards “the common pillar of solidarity.” This is because, mainly, “we increasingly observe that the highest-income sectors of the population receive their salaries through mechanisms related to capital remuneration, for example, via dividends or profits”; To which are added self-employment tools that allow alternatives with minimal contributions to social security.
For the accountant, “what we must do to strengthen effective contributions of these sectors, it is improve current contributory systems and design the necessary incentives to strengthen Social Security”; something in which the PIT-CNT goes in the opposite direction in its intention to ban them AFAP. “We will have less internal savings in our country,” the Cinve researcher warned in that sense.
Viñales’ second question is that “setting the age of 60 years of age and 30 years of work for access to a common retirement is really not understanding the change that is happening in the world of work, in our country, in the region and the entire world” based on new technologies that allow less rigid labor relations. A “strategic error”, just as he described it.
“In the same sense, more and more we will have to go to systems of ‘minimum old-age insurance or minimum income’ that guarantee a minimum retirement at the retirement age from active life, but without the requirements of ‘years’ of formal work, recognizing that many people who actually worked their entire active life cannot always prove formal years,” he noted in his report, and warned that incorporating such fixed parameters in the Constitution will grant “legal hierarchy to a variable that varies contrary to the current transformations in the world of work”.
Finally, Viñales pointed out that “saying no to the AFAP commission business, which obviously supports the entire Social Security System, is not the same as saying no to voluntary savings and much less implies saying no to mixed pension regime”.
“The true reform that is required in our country should have face of the future and not of the past“, stated the Cinve researcher, and insisted that the “path of constitutional reform weakens the possibilities of dialogue and what is even worse, will not bring any benefits to workers”.
Source: Ambito
