The Bolivian government has taken yet another step against the prevailing tide in political economics, just recently approving a pensions reform in parliament that will be send ripples around the world. Forcefully propelled by President Evo Morales, the reform establishes that the retirement age for Bolivian men will be lowered from 65 to 58, while women and mine workers will be able to draw their state pensions from the age of 56. A revolution in the field of pensions, when one considers that practically every other country in the world is grappling with the problems of raising retirement ages.
But there is a rational explanation. For Bolivians the main justification of such a change is connected with the ratio between working life and life expectancy: in the Andean nation the average life expectancy is currently only 66 years. This is one reason for the decision taken in La Paz. But not the only one. In Bolivia the average age of the population is roughly 22 years, and the population is growing at an annual rate of almost 2 percent: this is the fundamental basis for understanding Morales’ pension reform.
“The pensions system will not be totally revolutionised. But the changes will benefit many different sectors of the country’s economy”, explained Bruno Apaza, a top official in COB, the Central Obrera Boliviana trade union. “At COB we’re convinced that the national economy needs reactivating and diversifying, in order to trigger a new wave of industrialisation that will generate work and improve salaries”, he added. “As for the new pensions law, like most things, one must look at both sides of the coin. On the one hand workers are happy with the lowering of their retirement age, but on the other we’ll have to see how the economy reacts in coming years. The previsions regarding the pension fund cover a period of roughly 35 years. It’s too soon today to forecast – or even imagine – the effect that this will have on the life of Bolivians”, continued Apaza, speaking from La Paz.
“The real doubt is: will the state help the sector of the population that today has no work? Because although the workforce is willing to contribute to helping the less fortunate, the state must also contribute, and do much more for them. We shall see. When it comes down to it, it’s going to be the younger generation who are going to feel the effects of this situation, either in positive or in negative” he concluded.
Having restored fairer parameters to the working lives of Bolivians, President Morales has also decided to nationalise the two institutes that previously controlled the coffers of the pension funds: the Spanish bank BBVA and the Swiss Zurich Financial Service.
On top of this, the new reform also involves the creation of a “solidarity fund”, partly financed by the state, which will ensure a minimum pension to self-employed workers who have paid pension contributions for at least ten years. In Bolivia today, over sixty percent of the working population do not pay any contributions.