He PIT-CNT A total of 430,023 signatures were submitted Parliament Make your material Referendum vs Social Security Reform, will be voted along with Elections People of October.
The proposal that caused severe criticism from the ruling party, the Minimum retirement age 60 years of age starts, while the pension assets will be attached to him Minimum salary National.
Another axis of the initiative is elimination of personal savings AFAP and profit in pension scheme. Taking these guidelines into account, what will be the impact of the final approval of the referendum? The Uruguayan economy?
Increase in public spending and increase in taxes
The most obvious effect of possible constitutional reform is a strong increase public expenditure, Immediately, due to linking the minimum asset to the national minimum wage.
To meet this cost, “an additional 1.1 billion dollars per year will be needed,” explained the director of the Center for Economic and Social Reality Studies (Ceres). Ignatius Munio, Calculation of 1.5% of GDP.
Meanwhile, lowering the retirement age by 5 years would mean an increase of nearly $3,000 million. PBS, As well as military, police and parastatal funds equal to 4% of GDP.
At the same time, there is a consensus among economists that this change will increase business activity income tax. (IRAE), He wealth tax and the highest bands of personal income tax (IRPF), This would mean “serious damage to private investment and the future growth of the economy”.
Uruguay may lose investment grade
If Uruguayans check the changes in popular opinion, it could affect international perception Legal protection And clarity in the country's rules of the game undermines and undermines international trust Investments.
“Uruguay It is a country characterized by providing legal certainty Pension and superannuation “We run the risk of losing investment grade,” he said Minister of Labor and Social Security, Pablo Myers.
Investigations against the government are possible
The Exante partner warned that this situation would trigger legal uncertainty “not only because savings managed by AFAPs would be confiscated, but also because it calls into question the 1996 reform”. Pablo Roselli.
Munio also revealed something similar, saying that “members are likely to file lawsuits for the confiscation of savings managed by AFAP,” estimated at $22 billion. In turn, he hoped, “AFAP could do the same, claiming lost profits for commissions paid to members until they retire.”
Ceres' director felt the union's initiative, if approved, would mean cuts private savings, Because of the ban. “Those with higher incomes will look for alternatives abroad, international evidence shows,” he said.
Munyo noted that this is a must Regression effect In income distribution. “Contributors with higher incomes will have an incentive to reduce their contribution and benefit proportionately from the minimum benefits of the new system,” he said.
Along these lines, Roselli said, “The tabulation As was the case until 2005, a failure of the national minimum wage would encourage future governments to delay the minimum wage. In parallel, he argued that “only those with better careers and higher incomes can accumulate 30 years of service at age 60, while younger people should work beyond that age.”
