What's at stake? The Business Confederation of Portugal (CIP) has proposed "voluntary payment by companies of the 15th month, up to the limit of the basic salary earned by the worker", exempt from taxes and contributions. In reaction, Mariana Mortágua, leader of the Left Bloc, said that this measure "calls Social Security into question". "A 15th month that doesn't pay Social Security and taxes not only undermines Social Security, which is a workers' right and an achievement of democracy, but is actually worth less than the increase that employers should make by law to keep up with inflation," said Mariana Mortágua, MP and leader of the Left Bloc, on September 26. She was referring to the proposal by the Business Confederation of Portugal (CIP) to pay a 15th month's salary free of contributions and taxes, calling this measure "a bait" and an "offense" to workers. Is it true that it "jeopardizes Social Security"? Starting with the CIP's proposal and what this payment of a 15th month consists of. According to the document to which the Polygraph has had access, the Social Pact presents 30 measures that are subdivided into three axes: economic growth, workers' income and administrative simplification. The measure relating to the 15th month comes under the heading of workers' income and proposes "voluntary payment by companies of the 15th month, up to the limit of the basic salary earned by the worker, without incurring Personal Income Tax (IRS) and exclusion from the Social Security contribution base". Speaking to Polígrafo, Rafael Rocha, director-general of CIP, said that "the 15th month proposed by CIP has no impact on the current Social Security accounts because there is simply no 15th month today. In other words, the measure, if it goes ahead, will not take a penny from Social Security." In order to clarify whether or not this measure jeopardizes Social Security, Polígrafo contacted three experts: João Duque, economist and professor at the Instituto Superior de Economia e Gestão (ISEG); Filipe Grilo, economist at Porto Business School; and Luís Leon, tax expert and co-founder of the Ilya consultancy. "This only makes sense if the 15th month counts towards the basis for calculating pensions and there is no contribution to the pension, then it would call Social Security into question, but I don't think that's what's in CIP's proposal. What is in the proposal is that this is not part of the basis on which pensions are calculated, but this happens with other income. There is income that is exempt and then not counted for the purposes of calculating the pension. So this doesn't affect the sustainability of Social Security at all," says João Duque. The economist also says that, just as there are other "subsidies that are not part of the basis on which pensions are calculated", the same is true of this measure and, in this sense, it does not affect the sustainability of Social Security. Filipe Grilo begins by pointing in the same direction: "If we look at it from a naive point of view, which is what the bosses said, as we are comparing a situation in which there is no increase with a situation in which there is an increase, in fact Social Security is not being harmed because there was no money going to Social Security." On the other hand, he does point out that "if employers have the margin to raise wages and give this 15th month, then part of that money should go to Social Security, so it's running out of that money". However, he believes that "you can take money away, but calling Social Security into question is something else". "If a small change, a small discount on social contributions, jeopardizes Social Security, it's because Social Security itself is not balanced, as the government has been saying over the last few years," he stresses. In Luís Leon's view, "what CIP is saying is that they can pay a whole month's salary, as long as it's free of taxes and Social Security, because my cost in the company sphere corresponds to direct liquidity in the worker's sphere". "The consequence of this is a loss of revenue for the state in that this 15th month is a cost for the company, with which it pays no tax on profits, and in the worker's sphere it's cash in hand. Therefore, on the employer's side there is the advantage of not having to pay social security contributions on the value of the 15th month, and on the employee's side there is the advantage of not paying taxes immediately. The disadvantage is that, as there are no social security contributions, this amount will have no effect on social benefits", he explains. Leon admits that "it's true that not deducting part of the salary has an impact on social benefits, but there is an increase in the immediate liquidity of people who will only channel it into consumption if they so choose". In any case, he assures us, this "doesn't jeopardize Social Security". "It does have an impact on a future pension, but so does any profit sharing that a company does with workers, it's remuneration subject to IRS and has no impact on future pensions," Leon reiterates. He then concludes: "Portuguese society has never debated whether or not we think we should have all our future savings channeled into State Social Security and depend for our future pensions solely on a single entity in which we have no say." _______________________________ Polygraph evaluation: False Share Share Share Share [Additional Text] International Fact-Checking Network Marta Ferreira