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Labor reform (III). Labor reform and Social Security benefits

Last December, Royal Decree-Law 32/2021, of December 28, came into force. urgent measures for labor reform, guaranteeing stability in employment and transforming the labor market, known as the “new labor reform”, in this post I want to focus on the analysis of its impact on Social Security benefits. 

Purpose of the labor reform

This reform has as main purpose is to fight, first of all, against temporality, modifying certain aspects of temporary contracts, and secondly, the lfight against unemployment facilitating the management and processing of ERTE and introducing a new RED mechanism and bonuses in terms of contributions, thus trying to make the termination of the employment relationship the last resort. 

Despite the disappearance of the work and service contract, and the new rules of the game for temporary and training contracts, we must not forget that Yes, those regulated in article 12.6 and 12.7 are maintained as temporary contracts. of the TRET, which are used to access partial retirement, partial retirement clauses for the reduction of working hours of the person who is going to access this type of retirement, and relief contract for a person registered as a job seeker or previously hired by the company through a temporary contract, enforceable when the person who accesses partial retirement does so at an age below the legal retirement age. 

Important changes

There are, however, other important changes that have occurred during 2021 and even in 2022, which are specifically intended to improve our Social Security system and adapt it to current needs. These modifications are:

1. Law 27/2011, of August 1, on updating, adaptation and modernization of the Social Security system. 

This reform of the Social Security System is motivated by important sociological and economic factors, In order to preserve future pensions, that is why the retirement age was raised, among other changes, progressively from 2013 to 2027, going from 65 years to 67 years.

So, in 2022 the ordinary retirement age is raised increasing by two more months, the retirement age being 66 years and 2 months, and 65 years if you have been contributing for 37 years and 6 months or more. 

It also affects early retirement., since by delaying the ordinary retirement age the maximum advance payment of 4 years for involuntary early retirement and 2 years for voluntary early retirement would also be delayed by two months. 

Regarding the partial retirement modality in 2022, it will be allowed at 63 years and 4 months if you have 33 years of contributions, or 62 years and 2 months if you have at least 35 years and 6 months of contributions.

Lastly, highlight the change in the calculation of the regulatory base of the benefit, since now it will be calculated with the contributions of the last 25 years, that is, the result of dividing the sum of the last 300 contribution bases by 350. Furthermore, this change in the calculation of the financial benefit will be maintained for successive years, although the age of access to the pension continues to increase until 2027. 

2. Royal Decree-Law 3/2021, of February 2, which adopts measures to reduce the gender gap and other matters in the areas of Social Security and economics.  

For end discrimination that occurs with the previous maternity supplement, article 60 of the TRLGSS is modified, replacing it with new supplement to reduce the gender gap, of which both women and men recipients of retirement, permanent disability and widow's pensions can be beneficiaries, who meet the requirements, and receive the amount of €28 per month per son or daughter, with a limit of up to 4 times. 

3. Law 21/2021, of December 28, guaranteeing the purchasing power of pensions and other measures to reinforce the financial and social sustainability of the public pension system. 

This important reform of the Social Security system puts its emphasis on the sustainability of the public pension system, looking for solutions that make it possible to bring the real retirement age closer to the ordinary retirement age, through new regulation in the modalities of early retirement, and changes in the contributions of pensioners and companies. 

It is worth highlighting the introduction of two new cases of termination of the employment relationship to benefit from involuntary early retirement, the contemplation of women's social service for the calculation of the necessary minimum contribution period, and the modification of the reduction coefficients provided for the early retirement pension, going from a quarterly reduction coefficient to a monthly one for the remaining time from the access age to early retirement up to the ordinary retirement age. 

Labor Reform and Social Security Retirement Benefits

Furthermore, in order to guarantee the pension system in the face of different labor and demographic changes, the previous sustainability factor is eliminated, developing a new intergenerational equity mechanism through an additional contribution from 2023 to 2032 and successive reviews. 

4. Royal Decree 65/2022, of January 25, on updating the pensions of the Social Security system, the Passive Class pensions and other public social benefits for the year 2022. 

This recent Royal Decree updates the amounts of the minimum contributory pensions for retirement, permanent disability, widowhood, orphanhood and in favor of other family members for the year 2022 with effect from January 1, establishing in turn the maximum limit of pensions in €2,819.18, and the economic limit to be entitled to the minimum supplement is €7,939.00, although the latter was previously established in Law 22/2021, of December 28, on the General State Budgets for the year 2022.

Roughly, These are the main regulatory changes in labor and Social Security matters They aim to combat the major problems of our labor market and protection system, temporary employment, unemployment and the maintenance of the Social Security pension system.

However, they will not be the last either. We continue with an increase in the retirement age until 2027 and successive reviews from 2032; and each legislature likes to leave its mark on what, from its point of view, creates employment and favors the appropriate use of contracting, so we will see what labor activists expect to study and apply soon. 

Human Resources Technician and Master's Professor in HR Management and Labor Management

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