The preliminary results of the 2023 Census in Uruguay showed that the population is practically stagnant, and beginning a degrowth process which was only estimated for 2043. This scenario is already different from the one that was taken into account when carrying out the social security reform which was approved between April and May in Parliament, which raises new doubts about the future of the sustainability of the pension system Uruguayan.
“I wonder if the new data does not force review projections that were done for the retirement reform,” said the economist Jose Licandro on social networks, extolling the main drafter of the legal text, Rodolfo Saldain.
The data to which he referred are the preliminary data 2023 Census spread by the National Institute of Statistics (INE), which announced that the Uruguayan population is 3,444,263 people, just 1% more than in 2011 —and this thanks to immigration. If the information continues to be analyzed, between the last census survey and this one, the population growth rate was 0.08% annually.
This also meant that there are 122,287 people (3.4%) less than the projections that were handled in the government regarding the number of citizens the country has. Figures that were used to prepare the new pension scheme incorporated in the Law 20,130 on reform of the social security system. Which means that the projections are already off by at least 3.4%; with the possibility that the gap will become even larger as the years go by, considering the faster pace of population aging.
The concern regarding what may happen to the reform in the face of this clear change in scenario —even more dramatic if one considers that since 2021, the number of births is lower than the number of deaths, according to INE data, so the trend decreasing population is inevitable and closer than expected—was expressed through several queries on social networks to Saldain.
Likewise, several businessmen consulted by Ambit They realized that with this new information regarding the population of Uruguay, The reform approved this year and whose most important changes came into effect on December 1, must be updated to meet its objective: guarantee the sustainability of the pension system.
Saldain’s response
Just as many of the queries were through X—formerly Twitter—, Rodolfo Saldain He also used this medium to give a first response that will surely be deepened with the passing of the days and with greater analysis.
“The Census photo reinforces the foundations of the pension reform. The effects may be stronger and felt sooner than expected. The scenarios of future projections “They must start from that new baseline,” said the drafter of the reform in response to Licandro.
From his response it can be inferred that the government will have to go back to work on updating the projections, with the possibility on the table of making adjustments to the contribution scheme to the retirement funds and the AFAP. Even more so considering that the individual savings pillar has become smaller, going from 7.5% to 5% of the salary.
Late projections
According to the projections contemplated for the preparation of Law 20,130, the Uruguayan population would reach 3.54 million in 2040, continuing until then with slow growth. However, Census data showed that population growth is already practically zero, so the probabilities are high that the demographic curve begin a stage of decrease.
The same thing happens if you look at the ratio of active population to dependent population. Although the reduction in the minor population—from 0 to 14 years—has an impact here due to a lower proportion of births, the population aging It directly affects the relationship between active Uruguayans – who finance the pension system – and liabilities.
As the INE states, “the age structure of the population residing in the Uruguay confirms the process demographic aging that the country has been experiencing.” In this sense, for the first time in history, people aged 35 or over exceed 50% of the total.
Source: Ambito
