MADRID, Nov. 15 (Reuters) – The Spanish government has agreed with unions to increase social security contributions by 0.6% between 2023 and 2032 to help pay for the pensions of an emerging wave of retirees, the Social Security ministry said Monday.
Spain experienced a baby boom during the last two decades of Francisco Franco’s dictatorship, which ended in 1975, and the people born during that time are expected to retire soon, putting increasing pressure on state finances.
The magnitude of the hike, which will affect workers of all ages and income levels, has been a stumbling block in three-way talks between government, unions and businesses that have been going on for several weeks.
Earlier on Monday, business associations CEOE and Cepyme, which represent large and small companies respectively, left the negotiating table, arguing the plan would overburden employers and hurt jobs.
Employers will contribute 0.5% extra and employees the remaining 0.1%, unions say.
Implementing the pension reform was one of the conditions the Spanish government agreed with the European Commission to release billions of euros in recovery funds.
Reporting by Nathan Allen and Belen Carreno, editing by Andrei Khalip
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