Montevideo. With a majority of 17 of the 28 votes in the Senate, the centre-right government of President Luis Lacalle Pou has passed the much-discussed pension reform. Previously, after several substantive changes with the Chamber of Deputies, the legislative initiative had already passed the lower house of the Uruguayan Parliament happens.
The live broadcast of the vote in front of the Congress building was amid mass protests from the country’s largest trade unions and social organizations, as well as left-wing opposition parties accompanied.
The profound reform of the pension system sees above all, a gradual increase in the retirement age from 60 to 65 years. There are exceptions for employees who have already worked for 30 years when the law comes into force or who have worked for a total of 40 years regardless of the retirement age. Likewise, occupations such as construction and farm workers whose work requires “a high level of physical exertion” will still be allowed to retire at 60 after 30 years of service.
Another key point of the reform is the change in pension contribution payments. Previously, employees in the mixed pension system consisting of state and private pension funds were free to choose whether they also paid the statutory pension contributions of 15 percent of their net income to a private pension fund, but this is now mandatory. In the future, five percent of the taxes will go to one of the four private pension administrators (Afap), who will be allowed to use the money to invest in foreign government bonds, among other things.
After a first reform draft was introduced in parliament last October by the President and his 14 ministers with the cooperation of a commission of experts became, mainly internal discussions between the four coalition parties (PN, PC, CA, PI) caused a delay in legislation in the Senate. While the right-wing CA (Cabildo Abierto) is improving the policeman pension and the lowering of the basis for calculating the pension rate to 20 working years, the social-democratic PC (Partido Colorado) obtained a reduction in the social security tax.
However, the main criticism of the reform comes from trade unions and the left-wing party alliance Frente Amplio (FA).
According to Sixto Amaro, Secretary General of the National Organization of Pensioners’ Associations of Uruguay, is For example, the reduction in taxes in view of the more than 340,000 pensioners in the country who do not have to pay them at all due to their low income, no real help in the fight against poverty in old age. The reform is “catastrophic” and a plan with which the government “will vote against the majority of Uruguayans”.
Similar expressed Marcelo Abdala, President of the largest workers’ union PIT-CNT: “In this reform, the workers, the state and social security lose. The only ones who win are the Afap”.
Recent polling results from consulting firm Cifra, showing 54 percent of Uruguayans oppose the reform, confirm the criticism voiced by trade unions and the opposition.
While the government repeatedly refers to the demographic change in society, which is already causing pension expenditure of over ten percent of annual GDP, complain the opponents of the reform lack alternatives for financing the rising pensions, such as tax revenues from transnational companies.
Alongside a 24-hour general strike last week and mass nationwide protests on May 1, “International Workers’ Day,” PIT-CNT, Frente Amplio and the Socialist Party have already announced that their struggle goes on. Analogous to the referendum against the emergency law passed by the government (Ley de Urgente Consideración, amerika21 reported), the focus will now be on the 2024 presidential election placeto reverse the pension law.