Pensions and SMI: the economic cards that Sánchez can play in the campaign

MadridFor days now, pensions and the minimum interprofessional wage (SMI) have come into play in the run-up to the November 29th election campaign. First, Vox questioned the sustainability of the pension system, and this week the PP got itself into a muddle with the future increase in benefits, even though its leader, Alberto Núñez Feijóo, wanted to make his position clear: "Pensions are non-negotiable and that's that. They will be updated in line with the CPI, without a doubt. We will guarantee their viability, without a doubt," the popular leader stated this Thursday.

Meanwhile, Pedro Sánchez's executive positions itself as the sole guarantor of both things. In fact, these are two of the economic cards it does not hesitate to play. "Our intention is, of course, that the pension increase be approved before the end of the year. I am perplexed by the voices from the PP and Vox that say they will cut pensions or say the system is about to collapse," said Pedro Sánchez this Thursday, while speaking to the media from Brussels.

Also, the First Vice President and Minister of Economy, Carlos Cuerpo, has defended that it is "perfectly" possible to approve the pension increase based on inflation after the elections, even if the Spanish government is already in a caretaker capacity. Regarding the SMI, he has opened the door to approving the increase for 2027 before November 29th.

Pensions: an increase with a caretaker government?

The revaluation of pensions with inflation is fixed by law –it was one of the changes of the great reform of Pedro Sánchez's government in the last legislature–. How? When the inflation for the month of November is confirmed (it will be known in advance on November 27) of this year, the average will be calculated from the month of December of the previous year (in this case 2025), and this must be the increase. As a result of this calendar, Cuerpo himself has anticipated that the rise would take place with a government already acting in a caretaker capacity.

In his view, the update of pensions would "perfectly" comply with the requirements of "urgent necessity and general interest" that justify the approval of a royal decree-law by a caretaker government. Although it is possible, it is an exceptional and limited thing.

"This update will be done. The royal decree-law for the update can go the week after the elections [of November 29], because even if it is in a caretaker capacity it can be approved [in the council of ministers], and after it is approved by the permanent deputation [of Congress]", explained the minister, who defended it as a way to give peace of mind to pensioners.

The research and analysis center Funcas estimates that the reference for the revaluation of pensions for next year will be 3.6% and that, in fact, it will already be possible to calculate it preliminarily on November 27, when the National Statistics Institute (INE) anticipates the inflation rate for the month. The confirmation, however, will not occur until December. This increase in pensions will mean approximately 8.4 billion additional euros.

Minimum wage: pending experts

The second vice president and Minister of Labour, Yolanda Díaz, has asked the minimum wage expert group to prepare an increase proposal that, among other things, takes inflation into account. Cuerpo said in an interview with TVE that the approval of the new SMI will depend, precisely, on how the experts' work progresses. However, he said that to "reduce uncertainty" it would be "convenient to agree on and announce" the raise before November 29. Currently, the SMI stands at 1,221 gross euros per month in 14 payments. The majority unions, CCOO and UGT, are already pushing for a 7% raise. On the other hand, the president of the business association CEOE, Antonio Garmendi, has criticized a raise during an electoral period: "It is incredible", he asserted.