Spain lost 112,229 jobs and 50,000 Social Security contributors in February, and these figures sharpen the edge of recession in the country. For seven months the Social Security system has been losing registered contributors and is now at 2004 levels. After five years of financial crisis, the Social Security accounts are still afloat thanks to responsibility of various governments since the Pact of Toledo. But just because the accounts are healthy and not in debt does not mean there is no room to worry.
In 2011, after eleven years of positive revenues, Spain's pension system registered a slight deficit. According to National Accounting (which entails pension plans, unemployment benefits and the Salary Guarantee Fund), it is the second year in the red even though this debt has reached a mere 0.09% of the debt/GDP ratio. This year the system could register losses of between 5 and 7 billion euros.
Among other tricks, Minister Báñez could try to avoid asking the Ministry of Finance to pay in full the 7.5 billion euros received by the lowest group of pensioners for which the State only allots 35% of Social Security. This strategy would solve the problem and an old dispute with the Ministry of Finance, which has always resisted ongoing petitions from the Ministry of Employment. Still, the pressure to cut spending will make it difficult and force the national government to pull from the system's savings and adjust benefits again to state of the economy.
