After a marathonic session in the Chamber of Deputies, and hours after a day of extreme violence outside the Congress, the ruling party managed to approve this morning the pension reform with 127 votes in favor, 117 against and two abstentions.
The lower house approved a law for the reform of the update of pensions’ formula after twelve hours of open debate, tantrums and unsuccessful calls by the opposition to lift the session as last Thursday. With the reform approved, the State will save 61 billion pesos in 2018 (about 3,49 billion dollars), or 0.5 percent of Argentina’s Gross Domestic Product (GDP). However, the payment of the one-time bonus will reduce savings by around 4,000 million pesos, according to Elypsis consultancy.
The government -which is accused of governing only for the rich and has been criticized for reducing taxes on large companies- approved a reform of the pensions system after a day with incidents and clashes between protesters and security forces, which ended with 162 injured, including 88 police officers, and 61 detainees. Last night there were cacerolazos in different neighborhoods of the Capital and a crowd concentrated near the national assembly.
The project establishes a new formula for calculating pensions update. Unlike the current one, which mainly considers the evolution of salaries and the collection of tax revenues received by ANSES (Argentine government social insurance agency), the new one is composed in a ratio of 70/30 by the prices’ variation (inflation) and the average of wages from workers in dependency relationship.
This new formula, which would be applied every three months, does not include inflation in the last quarter of this year. Therefore, after a meeting with the governors last Friday, the Government promised to grant a compensating bond in March that, according to sources, would reach 10 million retirees and beneficiaries of the universal allocation per child.
According to political opponents and trade unionists, by modifying the formula for calculating pensions, the increases foreseen for workers will be reduced. Currently, the minimum retirement in Argentina is 7,246 pesos, equivalent to about 413 american dollars.
The saving of 61,000 million pesos per year is vital for the Argentine Government since it will be the base for the planned tax code overhaul and the fiscal consensus signed with the governors last November. These reforms attempt to reduce the deficit and production costs of companies, with the intention of attracting foreign investment to boost the economy.