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Social Security debates on FETV

by Joel Inwood

Changes to the Social Security Fund (CSS) were discussed by representatives from the National Front for the Defense of Social Security (FRENADESSO), representatives of Panama’s private sector, and CSS functionaries in the present system for three separate nights last week on Panama’s Channel five, Faith TV, special program "National Debate."

FRENADESSO representatives explained their "integral vision" for a better social security program, which could cover both the informal and the formal sector, on Monday, May 30. They also outlined their objections to the government’s proposal and the data used to justify it.

Representatives of Panamanian business interests shared their proposal the following Tuesday. They stated that it was the only one on the table that would permanently end the program’s deficit. Their plan would foster solidarity by making changes so that contributors to the program who make more money would be subsidizing those with smaller contributions, instead of those who contribute longer --- regardless of income --- carrying the weight as they state the system is currently, according to the speakers.

CSS officials on the following Thursday outlined their reasoning for making the changes they did, made comparisons between their proposal and those of other countries and explained their proposal. All three groups took questions from callers following their presentations.

FRENADESSO representative Professor William Hughes explained the reasoning behind referring to the government’s project as the "proposal of death." He demonstrated how Panamanians would have to "work harder and pay more [only to] get less and [possibly] die sooner." The government representatives retorted in their session that the old CSS was the "law of death," because it was going to completely collapse by 2014, according to their calculations. Business representatives pointed out that according to their calculations the new government proposal would ultimately meet the same fate, because it was not a permanent solution, but an adaptation to stretch the old plan out a little longer.

FRENADESSO representatives questioned the statistics produced by the government and business. They point to the huge shift in predictions between February 2005 figures and those used to justify the law, which represent almost a five fold increase in only three months for the projected number of new people to be covered. They stated that this jump clearly demonstrates that the figures were manipulated to create a demand for change. Business representatives countered that the old numbers did not come from sound and thorough studies.

Although none of the three groups claimed to be in favor of privatization for the fund, members of FRENADESSO said, "if you get a dictionary and look up the word privatization…" Private sector representatives stated that the use of individual accounts, which is part of their proposal, does not signify privatization. The government outlined three types of social security plans: capitalized, mixed, and solidary. Their proposal, they said, belongs to the latter, along with various nations such as the USA and "Cuba." Members of FRENADESSO stated that putting the money into private banks, as will be done under the government plan, represents privatization. The government says that is not privatization, and that those measures were necessary to avoid the danger of a single bank collapsing and bringing the fund down with it.

Both business representatives and CSS officials expressed that the large and growing informal sector could not be a part of their programs without contributions, and explained the way that those who make their living that way could buy in. Members of FRENADESSO said that an integral part of a larger strategy for the country is to create more jobs to move people in to the formal sector.

All three groups also stressed that autonomy for the CSS is very important. Business and FRENADESSO representatives pointed out that the government has a history of using funds for the CSS to pay for outside projects, and stressed that this practice must stop.

Also in this section:
Labor and management debate the CSS reforms
Summary of the new CSS law
Panama taxes today
The Panama News circulation numbers
Business & Economy Briefs