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After several years of declining real wages, the country’s pensioners saw a slight increase in purchasing power last year. This year, inflation will once again exceed pensions. It gives pensioners less to worry about in the crisis of 2020.
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– Even though the agreement has meant that pensions are regulated below inflation in five of the last six years, the government is not intervening. Pensioners are not allowed to participate in the development of prosperity at the same level as society in general, and it is a system that we do not accept, says the leader of the Pensioners Association, Jan Davidsen.
Like the so-called SAKO organizations, the Pensioners Association this year also refused to sign the minutes of the social security agreement. The same reaction form was chosen in 2015, 2016, 2017 and 2019.
Exposed
This year’s social security deal should have been carried out this spring but was postponed due to the crown crisis.
The social security agreement determines the basic amount in the National Insurance Regime and the level of the old-age and disability pension. It includes a total of approximately 1 million Norwegians.
– The rise in prices appears to increase more than pensions, admitted Labor Minister Torbjørn Røe Isaksen (H) when he presented the result on Wednesday morning.
This means that pensioners will not have greater purchasing power in 2020.
– Pensions follow the evolution of wages in society in good times and bad. In a difficult time, where moderation is shown in the settlement of wages, pensioners will also be affected, says Røe Isaksen.
Facts about the social security agreement:
The base amount in Folketrygden increases by 1.5% from NOK 99,858 to 101,351 as of May 1, 2020.
Pensioners receive an annual increase of 1.2 percent, while inflation is estimated at 1.4 percent.
The retirement pension during accrual, the disability benefit and other benefits regulated through the basic amount in the National Insurance Plan will have an income growth of 1.5% as of May 1, while the annual growth it will be 2.01%.
The numbers
The social security agreement shows that pensioners this year will have an annual increase in pensions of 1.2 percent. This is 0.5 percentage point lower than the result in wage settlement and 0.2 percentage point lower than this year’s inflation estimate of 1.4 percent.
Even if this year’s settlement is postponed, the effective date will remain May 1, so the postponement will not have an impact on the person’s annual old-age pension payment for 2020. This means there will be arrears this autumn.
The retirement pension during accrual, the disability benefit and other benefits regulated through the basic amount in the National Insurance Plan will have an income growth of 1.5% as of May 1, while the annual growth it will be 2.01%.
The salary settlement
The social security agreement is based on the outcome of wage negotiations in a competitive business sector. The result in the so-called front course ended in a salary increase of 1.7 percent.
The backdrop is an estimated 1.4 percent price increase this year, and therefore wage earners are likely to see weak real wage growth.
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In the years 2015 to 2018, pensioners experienced a drop in real wages, while last year they obtained a somewhat higher purchasing power. SV is among those who believe that this rule is unfair.
– We cannot passively look at the fact that pensioners and social security in Norway have less each year to deal with. This is a political responsibility and the government must take action, SV leader Audun Lysbakken tells Dagbladet.
It considers that the liquidation of social security should be the subject of real consideration in the Storting, as SV has proposed, and that pensioners have the right to negotiate. Today, there are only discussions about the social security agreement.
– Several years of infraregulation are marked on people’s wallets. Therefore, the regulatory model has to be changed and SV will propose it again at the Storting, says Lysbakken.
– You deserve better
The Progress Party is also reacting. Like SV, the principles of pension reform governed the government, but the FRP was the only party in the Storting that voted against when the infra-regulation was adopted in 2011.
– Improving the purchasing power of pensioners will be a priority for the Progress Party in budget negotiations with the government this fall, says Frps Erlend Wiborg, who heads the Committee on Labor and Social Affairs at the Storting.
– The country’s pensioners deserve better, they deserve to have the same percentage of income growth as the rest of society, without any type of infraregulation, he says.
The leader of the Labor Party, Jonas Gahr Støre, will also change the pension system, although to a lesser extent than SV and Frp. The Labor Party will replace the government’s pension model with an alternative in which retirees cannot fall into the red as long as the real incomes of wage earners are in the red.
– For many pensioners, the sum of this means a real deterioration in living conditions, Støre tells NTB in a comment on this year’s social security agreement.
Insufficient regulation
The reason pensioners have often lagged behind is precisely this under-regulation rule, which was introduced in connection with the pension reform in 2011.
It establishes that the pension must be adjusted according to salary growth, minus 0.75 percent. Disability benefits, which are also covered by the social security agreement, are, on the other hand, regulated by wage growth.
Before this year’s deal, the pensioners union demanded that the 0.75 percent infra-regulation be lifted and that pensioners be allowed to bargain in agreement with wage earners, NTB writes.
The union, led by former LO leader Jan Davidsen, also demanded that the front-line deal be used as the basis for this year’s deal, reform funds for the elderly and the disabled, that the social security deal be considered in the Storting and that the old-age pension for the disabled must be protected from life expectancy.
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