It may sound like political archaeology, but it's not.. On March 30, 1995, almost three decades ago now, the Congressional Budget Committee, then chaired by Rodolfo Martín Villa, approved the report issued by the paper that drafted the so-called Pact of Toledo, which owes its name to the fact that it was agreed in the tourist inn of the city of the three cultures. Presentation, by the way, that was born as an initiative of CiU when it was a state party.
During his speech, the spokesman for the Popular Party, former minister Juan Carlos Aparicio, then in the opposition, said bluntly: “The sincerity of intentions is demonstrated through the facts and it is time to show that we are all willing to move away from electoral and partisan battles matters as important and socially sensitive as pensions”. It is evident that it was another Spain.
One of the essential points of the Toledo Pact was, indeed, that such a delicate issue — today there are 9.02 million pensioners who receive an average of 1,319.41 euros — had to be removed from the electoral battle. Another of the relevant recommendations was that pensions should be revalued by the same amount as prices, and that is what happened.
In July 1997, already with Aznar in Moncloa, the so-called Law for the Consolidation and Rationalization of the Social Security System was approved, which made it clear that “pensions in their contributory modality, including the amount of the minimum pension, will be revalued at the beginning of each year, based on the corresponding consumer price index forecast for said year”, and if the CPI was higher than estimated, “the corresponding update will be carried out”. In other words, the possibility that pensioners could lose purchasing power was not contemplated, despite the fact that in those years Spain was struggling to enter the first phase of monetary union, which required reducing the public deficit to 3% of GDP..
For a few years, not many, the central parties of the system more or less followed the script, but the successive crises that the Spanish economy has had to deal with so far this century have blown up that principle..
the easy way
The paradox is that in each of its renewals —three since 1995— it is always remembered that among the 15 initial recommendations of the Toledo Pact was, indeed, the commitment that the parties will adopt the necessary measures to ensure the viability and sufficiency of the system. of pensions and, in parallel, “avoid electoral use of the pension system by the easy way of promising unrealizable improvements or sowing doubts about the intention or the capacity of the political adversary to guarantee the survival of the public pension system”.
It is evident that this has not been the case.. The next turn of the screw occurred a year later, when the same Government, also unilaterally, although with the approval of unions and employers, delayed the retirement age to 67 years.
the evil was done. What was intended to be done by consensus, given that this is a particularly sensitive issue —pensioners are not in a position to find alternative incomes when they are retired— has finally ended like a rosary at dawn. Everyone shoots at everyone, which reflects that the Toledo Pact is a dead letter.
The Popular Party took the next step and its pension reform of December 2013 culminated in a law with a somewhat cumbersome name —Regulating Law for the Sustainability Factor and the Revaluation Index of the Social Security Pension System— which, in short, condemned to raise pensions by 0.25% (minimum and maximum) until the pension system was financially healthy, something truly complicated as baby boomers approached retirement age. And most singularly, the rise would be independent of the evolution of the CPI.
The significance of that reform was once again the inconsistency of the PP, which if in 2011 it voted against the increase in the retirement age together with EH Bildu, ERC, UPyD or IU, a few months later it did not touch a comma when it reached the Government with absolute majority. The dirty work had been done by the previous Executive.
It is not necessary to go through the Harvard School of Economics or be an expert in political sociology to understand that article 7 of said law, the one that included that 0.25%, could only be sustained if inflation was very low or, of course, , negative. And that is what happened until 2018, the year in which prices rose again, although of course by a much lower amount than in recent years.. And it was precisely —surprises that life gives— a PP government that overturned its own norm. The latest budgets from the Rajoy era, approved just a few weeks before Sánchez's arrival at Moncloa, already included an increase of between 1% and 3%, although not only that.. In full reversal of its own laws, the PP not only breached its initial law, but also froze the sustainability factor until 2023, the application of which would have meant an additional cut in pensions, taking into account factors such as demographics and hope of life.
The cards in the deck
Pensions definitely entered the political carousel, but not to find joint solutions in Parliament, which was what was intended with the Toledo Pact, but rather to establish a position. The most singular case is that of the Popular Party, which in the almost 30 years of life of the Toledo Pact has played with all the cards in the deck. Sometimes supporting a revaluation of pensions in line with the CPI, on other occasions approving their freezing in practice (that 0.25%) and lately moving in no man's land.
What came out of the last meeting of the Toledo Pact —November 2020— was the following (second recommendation): “The Commission defends the maintenance of the purchasing power of pensioners through the annual revaluation of their pensions based on the real CPI, as well as as its guarantee by law and its preservation through the adoption of measures to ensure the future social and financial balance of the system..
Who or who approved this recommendation? Well, basically the entire Chamber, except for the two anti-capitalist deputies of the CUP, who voted against, and the abstention of Vox, ERC, EH Bildu, Foro Asturias and the BNG. In total, 262 votes in favor.
With this broad backing, one might expect the pension controversy to be buried for some time, but given the way the campaign is going, that doesn't appear to be the case.. Obviously, because a black swan has appeared, which is called inflation, which has served, once again, to establish a position. There is no doubt that the Government's and it is embodied in a law: all pensions, regardless of their amount, must rise the same as the CPI. It is more difficult to know that of the PP, which plays with ambiguity. It does not say that it will repeal the norm if it reaches Moncloa, but to wear down the Government it suggests that the pension system as it is designed today is unsustainable, which gives rise to suspicions that if something is not sustainable, adjustments will come , and the lion's share, obviously, is revaluation in an inflationary context.
This is, precisely, the chaos in which Feijóo lives, and hence the erratic nature of his comments and the origin of his slip, not to use another adjective, on TVE. Playing Galician in such a serious matter, however, does not seem reasonable. It already happened to Pablo Casado, who with his policy of harassment and demolition of the Government reached the inconsistency of voting against the recommendations of the Toledo Pact that his parliamentary group had approved.
“Your Honor, the recommendations of the Toledo Pact are not perfect, and we know it,” said Deputy Cabezón Casas, spokesman for the PP on pension reform, in plenary session, “but we can proudly say that this agreement strengthens Social Security and Its fundamental principles: public pay-as-you-go system, intergenerational solidarity and single fund”. As far as is known, the current law does not break any of these principles, but the popular group —its spokesperson was once again the deputy Cabezón Casas— voted in favor of returning the bill to the Executive.
Obviously, he did not succeed, but that gesture makes the ambiguity in which the PP lives in terms of pensions very clear, Yes, but no. as preferred. there is only one thing clear.