‘Pensions won’t be frozen,’ promises Spain’s Rajoy

MADRID — Spain’s Prime Minister Mariano Rajoy on Wednesday fended off criticism over stagnant pensions by promising to raise payments if he gets opposition backing for the delayed 2018 budget.

Rajoy said he will propose tax cuts for retirees and families, as well as increases for minimum pensions and payments to widows under the framework of budget negotiations, which are due to start later this month.

“As long as I’m the prime minister, pensions won’t be frozen … they will rise as much as possible,” he told Congress in a special session called in response to pensioners’ protests and criticism by the opposition.

Labor unions have called fresh demonstrations for Saturday, demanding payment increases in line with inflation, which reached 2 percent in 2017. Pensions have risen by 0.25 percent annually in the past five years.

Rajoy’s minority government managed to assemble a fragile multiparty coalition to back the 2017 budget, but it’s unclear whether it will be able to do the same this year, with some key opposition groups hesitant to lend their support.

The Socialists and far-left Podemos have tried to sink their teeth into Rajoy on pensions, an issue dear to the ruling Popular Party’s aging constituency: An estimated 36 percent of over-65s voted for Rajoy in 2016, when he received 33 percent of the total vote.

“You should be ashamed to raise pensioners’ payments by €2 and come here boasting,” Margarita Robles, the Socialist speaker in Congress, told Rajoy on Wednesday.

“You say there’s no money. It’s not true,” said Pablo Iglesias, the leader of Podemos, accusing Rajoy of wasting taxpayers’ money by bailing out the banks.

“We can’t spend what we don’t have because that is precisely what sank our country and we’re obliged to meet our European commitments in terms of the public deficit,” Rajoy replied.

While rising prices have eroded pensioners’ purchasing power in recent years, Rajoy spared retirees from cutbacks applied to public servants, health and education during the economic crisis in his first mandate.

The average income of people over 66 in Spain is nearly equal to that of working-age people, one of the highest levels in the OECD, according to a recent report, while the poverty rate is one of the lowest at 5.4 percent.

Spain spends around 11.4 percent of its GDP and 29 percent of its total public expenditure on pensions. Analysts warn that the proportion of working-age people who sustain the system will dramatically sink in the coming decades while the proportion of pensioners will grow.

Original Article