PS: Cut 600 million in pensions destroys 15,000 jobs – Jornal de Negócios – Portugal

The team of PS economists simulated cutting impact on pensions of € 600 million, and says recessive effect gives “an obvious sign of the destructive nature of such measures”. Deficit only lower half of the cutting value.

A cut of 600 million euros in pensions today destroy 15,000 jobs after four years and will imply a GDP in 2019 about 500 million euros lower than would occur without such reduction. This recessionary effect justifies budgetary impacts lower than expected:. In all the four years, on average, for each euro cut in pensions, the low budget deficit only 47 cents

These are accounts of the PS experts in note dedicated to the more detailed analysis of the impact of measures affecting the Social Security included in the PS of the program – reduction of TSU companies and workers – and which also produce an estimate of macroeconomic and budgetary impact of a cut in pension payments 600 million, concluding that the results give “an obvious sign of the destructive nature of such policies.”

“The cut 600 million in 2016 translates into only a deficit reduction of EUR 391 million in 2016, or up to 239 million euros in 2019, “estimate, arguing that” this deterioration of the budgetary impact is due to the recessionary effect of the measure, resulting in a GDP fall of -0.4% in cumulative terms over the four years of simulation. Ie 574 million lower than would be the Portuguese GDP in the absence of this measure, “reads the document that the Business had access.

At the same time, they add,” spending on unemployment benefits increase EUR 45 million in 2018 and 2019, due to the destruction of 15,000 jobs. Which in turn is associated with a reduction in household disposable income as a result of cuts in pensions, which reaches € 3,175 million in four years. “

PS Experts justify the exercise as the aim simulate “a reduction of 600 million euros worth of pensions proposed by the parties of the government majority.” The government effectively supports the need to find a measure of sustainability of Social Security that amount, but refuses to take a particular model to attain, explaining that any solution pensions lacks according to the PS. The starting point seems however to take as likely to a cut in pension payments, which the PS refusal.

In the stability program sent to Brussels, the Ministry of Finance includes saving of 600 million euros, through a measure of sustainability calibrated according to the measure which he defended last year and was considered unconstitutional: it is expected to cut pension of 372 million and EUR 277 million revenue increases (via increase of 0.25 percentage points in the standard VAT rate and 0.2 percentage points in the workers’ contributions to social security).