[Politics] Social security problem is not exclusive to Ecuador. What are the differences with France and Argentina?

[@CharliAviless]

 

In the midst of strong clashes and protests, the French have decided to reject a proposal by their president Emmanuel Macron to increase the minimum retirement age, while the World Bank calls for the age to be increased worldwide to maintain the proportion of the po[CENSORED]tion economically active. Both facts reflect that the problem of social security extends around the world. Ecuador is no exception.

According to Augusto De la Torre, former World Bank chief economist for the region, and current leader of the Inter-institutional Commission that seeks to create a reform for the pension system of the Ecuadorian Social Security Institute (IESS), there are great differences and similarities in the problems of pension systems around the world. Pay-as-you-go systems such as those in Ecuador, the US and France are facing the impact of higher life expectancy on the system deficit. These in turn transfer the problem to the tax issue. In this sense, various governments worldwide are trying to limit the fiscal impact.

However, countries have different ways of absorbing the problem. In some that are advanced and have debt capacity, they do so by acquiring more debt to cover those gaps. However, for example, in France there would no longer be room for it and Macron proposes an increase in the minimum retirement age, which has generated this impressive reaction. In this sense, we can talk about the tragedy of the commons, and it is that since the resources belong to everyone, they also belong to nobody, people say that the treasury should take care of the problem, but we all end up affected by this problem, for example in the increase in taxes.

Another interesting case is that of Argentina, for which the Government pays between 7% and 8% of GDP. There they are solving it by issuing banknotes, which ends up affecting inflation. Right now they are at 105% inflation and in danger of going into hyperinflation. In both cases this liquefies the pensions. Retirees receive the same pensions nominally, but the purchasing power is much lower.

 

https://www.eluniverso.com/noticias/economia/problema-de-seguridad-social-no-es-exclusivo-de-ecuador-cuales-son-las-diferencias-con-francia-y-argentina-nota/