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As expected, sickness subsidy and supplement expenses increased by 70 million euros (17% in the same period). In total, the different “exceptional and temporary measures of Covid-19” have already cost 1,298 million euros.
The social insertion income remained on the counter, whose charges are decreasing (13 million less). In statements to the Observer, Miguel Coelho, former president of the Social Security Institute, attributes this evolution to the fact that the support “does not respond adequately to situations of need” because it has “an architecture out of date with reality.” That is why the potential beneficiaries opt for other supports, such as food.
Social Security income is much more volatile than spending in any business cycle because it is highly dependent on employment: if employment increases, it increases; If the job fails, it fails. In other words, when the economy is growing, income increases with higher contributions through increased employment and wages. But when there is a contraction, that income falls (and spending increases, that is, with unemployment benefits).
Spending is more static than income. And this is reflected, for example, in pension spending: whenever there is an extraordinary increase, as has occurred in recent years, this amount is added to future fixed spending.
“The impact of Covid-19 is not only the fall of 200 million euros [em contribuições] compared to last year, as well as the total consumption of income growth that did not materialize ”, summarizes Luís León. The Deloitte inspector also points out that, until March, Social Security contributions they were growing about 250 million euros, a result of lower unemployment rates and higher wages, at least through the increase in the minimum wage, which has a “direct impact on Social Security contributions.” “The total amount of the increase is State income: 35% of the minimum wage goes directly to the Social Security Budget,” he explains. But, on the other hand, pension expenses also increased.
The pandemic has caused an increase in spending of more than two billion euros in one year. And this time, unlike the previous crisis, emigration should not help contain spending in a crisis that is global. By the way, “there may even be a contrary phenomenon, which is that more people return”Miguel Coelho undertakes.
Without exceptional measures, spending would have increased by 5% (not 12.6%)
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A report by the Public Finance Council (CFP) on the Social Security budget execution, referred to June but published in September, concluded that, in the first half of the year, the exceptional measures to respond to the pandemic had been responsible for the 60 % of the increase. of Social Security spending. Without them, actual spending would have increased just 5% instead of the 12.6% that grew. At the time, the CFP wrote that the layoff absorbed 71.8% of spending specifically in response to the pandemic. This value decreased, in the accounts made by the Observer, to 61.6% in August, which is explained by the end of the simplified dismissal (in July) and a low adherence to support for the progressive recovery (in August).
The problem comes from behind. According to the budget execution of August 2019, in the first eight months of last year, the income of Social Security with contributions and contributions reached 11,972 million euros, while pensions and other social benefits cost 15,566 million euros. It was current transfers from the central administration (which include transfers from the State Budgets) and transfers from the European social fund that contributed to the surplus of 2,041 million.
Now, let’s look at August. Current expenditure is already 19,506 million euros (with all social benefits included). On the other hand, Social Security contributions are reduced to 11,722 million euros and transfers from the central administration amount to 6,258 million, which, alone, it would not compensate for the expense.
“Sustainability has to be measured by the capacity of the system to generate annual income to pay its expenses from the part of the system that is contributory”, argues Miguel Coelho. Luís León, while recognizing that this year is “atypical”, points out that “we need other current income and other transfers and allocations from the State Budget to balance the Social Security Budget. And this is something structural ”.
Every year, the State has used transfers from the State Budget, social VAT, European Social Fund and “other current income”. All this together we are talking about 1,500 million euros a year. – that does not come from contributions ”.
The increasing spending on pensions also weighs on the Social Security accounts, but Luís León believes that it is not due to the extraordinary increase in pensions (which should happen again this year), but mainly to the “reconfiguration of Portuguese society” .
