On Monday, the Ministry of Social Security said the Spanish government had agreed with unions to increase social security contributions by 0.6% between 2023 and 2032 to help pay for the next wave of pensioners.
Spain experienced a baby boom during the last two decades of Francisco Franco’s dictatorship that ended in 1975, and people born during that period are expected to retire soon, putting state finances under increasing strain.
The scale of the increase, which will affect employees of all ages and income levels, has been a stumbling block in the three-way talks between government, unions and companies that have continued for several weeks.
Earlier on Monday, business associations representing companies large and small left a negotiating table, arguing that the plan imposed too much burden on employers and would hurt job creation.
The unions said employers would contribute an additional 0.5% and workers the remaining 0.1%.
The approval of pension reform was one of the conditions the Spanish government agreed with the European Commission to secure the release of billions of euros in recovery funds.
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