Luis de Guindos unveiled a reform program last week, which will try to satisfy demands placed on Spain by the European Commission.
Olli Rehn, the EU's Commissioner of Economic Affairs, told Mariano Rajoy and Spain's Minister of the Economy yesterday that only one detail is missing: pension reform needs to continue so until the retirement age aligns better with life expectancy. In the reforms passed in 2011, a clause revising this detail was included. The EU is putting on the pressure because this clause dictates that the retirement age wouldn't change until 2027. The EU wants the change to happen sooner.
The Spanish government is trying to avoid the thorny pension issue in order to not lose voters at the ballot box, but it is clear that other European countries have good memories and strong worries about what will happen if pension reforms don't happen fast enough. The pension system's overall good health is failing due some serious complications. The government could either find a cure quickly or, in classic Rajoy style, let the problem grow so quickly that the sustainability of the pension system could be compromised. It's incomprehensible that pensions were not frozen for 2013. Montoro is in charge of the national budget, so he should have been the first to call for a pension freeze. But neither he nor Rajoy wanted the issue to mar elections in Galicia, where a large number of voters are retired.
History is repeating itself. As the 2012 budget process was delayed because of elections in Andalusia, once again political interest are coming before what the people of Spain need.
