Pensions fall: how the destruction of some 255 thousand registered jobs in private companies impacts

A new study by IDESA reveals that the destruction of over 255,000 registered private sector jobs has significantly impacted retirement benefits in recent years. The research highlights how the decline in formal employment does not necessarily translate into higher unemployment rates, as many workers have moved into informal sectors. This shift has led to immediate drops in income and long-term consequences for future pensions. Between November 2023 and April 2026, the study notes that while employment in dynamic sectors increased by 11,000 formal positions, urban areas saw a drop of 267,000 jobs. This results in a net loss of approximately 255,000 registered salaried positions in the private sector. According to the report, this job destruction is not reflected in official unemployment statistics because individuals are moving into informal work, which includes unregistered wage earners and self-employed individuals who do not pay into the Monotributo system. The report further states that during the same period, informal employment grew by an estimated 450,000 jobs. While overall employment numbers remain stable, these new positions are characterized by low quality and poor working conditions. This trend underscores the growing disparity between economic growth driven by agriculture, energy, and mining and the stagnation of urban economies. The impact on the pension system is profound. The study points out that the poor performance of the labor market has immediate negative effects but also affects the long-term sustainability of the pension system. It adds that the decision not to renew moratoriums exacerbates these issues. According to data from the Subsecretariat of Social Security, in 2024 there were 105,000 contributions-based retirements with 30 years of payments and 320,000 retirements under moratoriums and the PUAM program, which allows retirement without meeting the minimum contribution requirements. In 2025, the number of contributions-based retirements rose slightly to 113,000, while retirements under moratoriums and PUAM dropped to 248,000. For 2026, projections indicate 110,000 contributions-based retirements and 123,000 retirements under moratoriums and PUAM. These figures show a projected 45 percent decrease in retirements under moratoriums and PUAM compared to 2024. The study explains that the decline in retirees without sufficient contributions is due to the closure of moratoriums, making it harder for those without enough payments to access pension benefits through the PUAM program, which primarily requires reaching age 65 regardless of gender. The report warns that the deterioration of the labor market will have negative impacts both in the present and the future. It emphasizes that the majority of retirees will be individuals without adequate contributions who will rely on the PUAM program, receiving benefits equivalent to 80 percent of the minimum pension. Even among those retiring with contributions, an increasing proportion will do so through the Monotributo system, resulting in minimum pension levels. The persistence of widespread informality in the labor market ensures that the quality of life for retirees will worsen compared to current standards. IDESA stresses the urgency of implementing measures to generate high-quality jobs, not only to alleviate the current social situation but also to improve future pensions. A crucial step would be the implementation of the Labor Modernization Law, though additional steps are needed to fully realize its potential. The greatest challenge lies in avoiding further delays in tax and pension reforms. In terms of taxation, simply reducing taxes as circumstances allow is insufficient. The report calls for comprehensive reforms that address the structural issues affecting both employment and pension systems. Without such actions, the long-term stability of the economy and the well-being of future retirees remain at risk.