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Decline in Social Security registration

The drop in contributors heightens the urgency of addressing pension reform

The catastrophic evolution of the Spanish labor market was already perfectly apparent in the Active Population Survey (EPA) for the fourth quarter of 2012. The number of unemployed registered by the Labor Ministry during the month of January underlines the gloomy diagnosis, confirming that last month the number of the officially unemployed exceeded 4.98 million. Though the estimate that Spain lost 8,500 jobs per day in the month of January is very striking, the most damaging aspect for the whole of society is the slow but continual decline in the number of contributors to the Social Security system. By the end of the month this figure had fallen by more than 263,000, so that the total number of contributors now stands at 16.179 million. In other words, between January of 2012 and 2013 the Social Security system lost almost 780,000 workers.

At this rate of destruction of jobs, and of contributors, the pension system is likely to break down even more quickly than had been expected. At this time there are 1.93 registered contributors for each person receiving a pension; in 2013 the decline will continue, perhaps at a lesser rate, but with disastrous consequences. Initial estimates suggest that, December to December, in 2013 a further 450,000 jobs will be lost.

The government consoles itself concerning this persistent hemorrhage, with the argument that the rate of decline in registered contributors is becoming progressively slower; but the immediate consequence is that it reduces government's room for maneuver as regards any possible reform of the pension system, and sets off all the alarms concerning the social malaise that is looming on the horizon. It is necessary to reiterate the urgent need for a plan to regenerate employment or, at least, to prevent the gradual destruction of Spain's corporate and labor tissue. The EU demand for spending cuts prevents the organization of an autonomous employment plan, financed by the national budget.

This is why it is also necessary, on the one hand, to press the EU authorities, particularly Germany, to the effect that euro zone funds, in whatever quantity, will finally be loosened and used to stimulate employment, especially for the young. Germany, indeed, has obtained positive results with its programs of investment action, so much so that German youth unemployment stands at little more than two percent.

Meanwhile, without ready money, it is not impossible to organize plans to favor employment. What is certainly unquestionable is that any aid plan that is cast in the form of subsidy or fiscal relief, must be conditional upon real and perfectly measurable results; every euro invested or withheld from state revenue has to be linked to strict results in generation of employment. The government ought to revise fiscal expenditure, and see to it that existing tax exemptions for the creation of employment are in fact effective; and if they are not, it ought to consider the need to suppress them, and to organize others that might prove less costly and more effective.

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