Center for Information, Documentation and Research Support (CIDAI)
E-mail: cidai@cidai.uca.edu.sv

Central American University (UCA)
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     Proceso is published weekly in Spanish by the Center for Information, Documentation and Research Support (CIDAI) of the Central American University (UCA) of El Salvador. Portions are sent in English to the *reg.elsalvador* conference of PeaceNet in the USA and may be forwarded or copied to other networks and electronic mailing lists. Please make sure to mention Proceso when quoting from this publication.

     Subscriptions to Proceso in Spanish can be obtained by sending a check for US$50.00 (Americas) or $75.00 (Europe) made out to 'Universidad Centroamericana' and sent to the above address. Or read it partially on the UCA’s Web Page: http://www.uca.edu.sv
     For the ones who are interested in sending donations, these would be welcome at Proceso. Apdo. Postal 01-168, San Salvador, El Salvador.

INDEX

EDITORIAL

    The new year just started and, in theory, new things should arrive. In the personal field, it is probable that some changes affect the lives of the Salvadoran. It is probable that new experiences –good and bad- appear in their horizon along 2002. However, without considering the personal field less important than other aspects in life, the society, as a whole, has its own importance. What every Salvadoran can achieve, individually, during the new year, is a part of what the society might expect. That is why the question about the country’s perspective is not only a matter of public interest, but also a personal issue, since the expectations that everyone can have about the immediate future depend on real answers about the country’s perspective.

    The official circles try to sell the idea that the country has enviable social and economic perspectives for the new year. At these circles, situations such as last year’s earthquakes are only distant memories, which are only convenient to leave behind. If they affected the society and the economy –these rhetoric and advertising experts say- that is only a thing of the past, that is, something that already belongs to the old year. What we have to do now –they insist- is face with optimism the luminous future that opens up to El Salvador, thanks to the efforts of a government compromised with the national development. Those who accept this vision of reality will be the good Salvadorans; those who do not, will be the bad sons of El Salvador.

    Obviously, more than one person will buy the story of a country where there are opportunities, development and progress for everyone. In the end, the informative media knows well how to play its role when it comes to manipulate the public opinion. Despite that reality reveals that lie, many of those optimistic ones will not want to see the information presented before their eyes, and they will rather live with a mirage of progress, development, and well-being. Among these optimistic ones, we will surely find the beneficiaries of the Flores administration’s accomplishments, which explain their point of view. It is also probable that, among them, there are those who will not obtain any benefit at all from Flores’ accomplishments. On the contrary, there is no justification  for a deception, which can also be painful and frustrating before the impossibility to accomplish the expectations made up by the advertising manipulation encouraged by the government.

    There are those who do not believe the story of a country with a social and economic upturn. They are called “pessimists”, although the correct name for them would be “realists”. Among those, the most lucid ones do not forget the country’s social, political, and economic misfortunes that already existed before the Flores administration. With it, these problems only grew worse. There are the “old problems” of El Salvador –the deterioration of the conditions in which most of the population lives, the increasing prices, the frozen salaries, the damage of the productive apparatus, the agricultural crisis, insecurity, and violence- which do not only appear at the new year’s horizon, but that also threaten to get worse if the country’s administration does not make positive changes. The Flores government under appreciated the opportunity opened by the 2001 earthquakes, that is, the present government did not propel a change in the country’s social, economic, or political field. At the moment, there are no changes at sight for the governmental administration. In consequence, what could be expected is more of the same from the governmental circles. Which means that the old problems will remain during the new year, oppressing the lives of the Salvadorans and making their existence even more precarious.

    To realize the former ideas will surely cause uncertainty in more than one person. And between a lie and uncertainty there will be a great number of people who will prefer a lie. However, although it might be a personal choice, it is also a dangerous one, at least for two reasons. In the first place, a lie –when it encourages false expectations- can cause a collective frustration of endless consequences for the social stability. In the second place, a lie can turn itself into an obstacle to face and resolve the problems. At this point, perhaps uncertainty could be more uncomfortable than a lie; however, if it is well assimilated it can turn into an incentive to look for solutions.

    The new year, it is true, brings with itself old problems, many of which have not been resolved because of a lack of will, ignorance, and the predominance of unspeakable interests. To realize the presence of those problems is the first step to face them; the next step is to take the right decisions to solve them, according to the responsibilities and the activities of each person. The other option –to turn our backs on reality- can only lead us to perpetuate them.

    This might be convenient for some people, but it is definitively not convenient for most of the society. In this sense, an important task is before the eyes of the Salvadorans during the new year: to face with realism the country’s serious problems, and to demand that the authorities assume their responsibility to face those problems without creating false expectations, and considering the safety of the population as a goal. Only an intense social pressure can make the government change its habit of hiding its head on the ground. Hopefully, this new year we will count with more participation of the civil society inside the public scene.
 

    The approval of the Nation’s General Budget (December the 20th of 2001), thanks to the votes of the FMLN’s renovators, allows us to predict new dynamics inside the Legislative Assembly along the new year. Since 2002 is a pre-electoral year, an intensification of the fights and mutual accusations among the political parties can be expected, typical on a context of that nature.  However, during this occasion, the official party will count with the support of a group inside the FMLN for the discredit campaign that will surely be outlined against this party.

    Immediately after the six “renovator” deputies showed their approval for the budget presented by the official party, the FMLN’s political commission declared that they (the renovators) did not agree with the party’s orientation or with the decisions of the legislative fraction. This is almost equivalent to say that they are rebellious deputies, more closely to be penalized by the party’s statutes –in those cases they establish sanctions that can go from a simple admonition to an expulsion.

    Observing it in a superficial way, it is possible that the former idea might not be much of an attention getter. However, considering the environment of internal fights and the pre-electoral year that is just starting, the Political Commission’s declaration –as far as the renovators’ behavior is concerned- can be the augury of its imminent expulsion from the party’s ranks. Even if it is true that it is not the first time that they demarcate themselves from a decision supported by the rest of the FMLN’s fraction members, it is highly probable that the December 2001 votes might be the last drop that spills the water from the glass. This article will examine some of the elements that not only confirm the former ideas, but which also set the discussion about a definitive rupture that, probably, could be the best thing that could happen to the main opposition party.

    During 2002, the political institutions will prepare themselves to face the 2003 municipal and legislative elections. By the end of 2001, the opinion polls revealed that the FMLN descended in the voters’ preferences. In this sense, as many analysts have said, if an answer to its internal crisis is not found soon, it will have very little probabilities of obtaining positive results during the next elections.

    The leaders of both branches, orthodox and renovators, should realize the former idea to improve their strategy, in order to face the next year’s elections. At the moment, the orthodox have complained to the press, accusing the renovators of every problem that the party suffers. Everything suggests that that is the main orthodox support in order to become a solid political option inside the party. Will the FMLN be able to win the credibility of the population?

    There is no doubt that the answer to that question cannot be positive. Therefore, since the orthodox are the ones who hold the left-wing party’s power, they are also responsible to find a way out of the present internal crisis that that shakes-up the party. Because of the renovators’ intransigence, their expulsion turns almost unavoidable. In addition, the last declarations of the political commission point to that direction. Despite that it might be questioned if that is the best solution before the impossibility of a serious debate in this party, it still is, however, the most “comfortable” situation, which has been the favorite one of both sides.

    Inside the formerly described context, the winner is ARENA, without a doubt. Assuming the fact that a definitive break-up within the FMLN’s ranks were given, it is necessary to mention that inside the Legislative Assembly the activities will be restructured up to this moment dominated by the ARENA-PCN coalition. It is in this context that the president of the First Organ of the state, Walter Araujo, said that January was a month of surprises for the Assembly. And in case a definitive rupture occurs inside the FMLN, the six renovating deputies will be a decisive force to make important decisions at the Legislative institution. Its deputies will be a key aspect for the Flores administration, especially for the approval of many loans that are still kept on hold.

    In addition, the common dream between the ARENA members and the renovators would come true: witness the political discredit of the present FMLN leaders. In ARENA’s case, it means to improve the control they have over the national political life. In the case of the renovators, it means to recuperate a certain amount of political trust (because of the risk that being thrown out of the party could mean to them). That is why one of the first political objectives of the ARENA members and the renovators during this new year will be to block the main decisions that the orthodox make at the Legislative Assembly. As far as they achieve their goal, the first ones will be able to increase their control over the country’s political life; and the second ones will be able to guarantee themselves their political existence.

    In any case, the orthodox have the last word. According with their ability to face the problem that the uncomfortable behavior of the renovators involves, their almost absolute control over the party could turn into an electoral advantage for the FMLN. If not, if they decide to leave them out, they will have to realize the new relation of forces to be opened at the first organ of the state, along with all the political disadvantages that it might mean.

    In summary, just like Walter Araujo assured in an interview, after the declaration of the FMLN’s Political Commission about the behavior of the renovators and the subsequent speculations, January could be a very active month inside the Assembly. It should not be expected, however, that the winds of change get politics closer to fulfill the Salvadorans demands.

    Instead, it will be a political battle. Its importance is crucial, but not precisely because it can help to improve the conditions of the poorest Salvadorans throughout the new year, but because they will have to carry with the deputies’ mistakes. In addition, those changes will shape the results of the 2003 elections. After that, we will know if ARENA will keep consolidating itself as the only party with the option to become a member of the Executive Power, or if there is a possibility to make a change in that area. This will also be the way to know if there is a possibility to move forward in order to consolidate democracy, or if the right wing will keep the control of the institutions that make the country’s political decisions, with the authoritarian vices that have characterized the right-wing’s administration since 1989.
 

    Besides the lay off of over 8,400 workers from the public sector, and the frozen minimum wage rate, 2002 has brought more bad news for the employees and their employers: a new increase in the rates of the institutions that administrate the pension funds (called AFP, in Spanish), the Salvadoran Institute of Social Security (ISSS), and the National Institute of Pensions for the Public Employee (INPEP). This means that all the affiliated workers will have to suffer an increase in their payment to the pensions’ system from 3% to 3.25%, which means an 8.3% increase for the total amount paid for the pensions’ fund. Only the teachers that belong to the public sector will be exempt of this measure, but only because they already pay 3.5% since 1998. By itself, the increase on the rate might seem insignificant, however, it actually is only a part of the strong changes in the amount and the composition of the contributions from employers and employees to the social security system.

    This increase is the last one contemplated in the temporary regimen of the pensions’ saving system Law, approved on December 1996, by the Legislative Assembly’s deputies. Ever since then, the rates of the workers for the system of pensions have been tripled (without including the impact of commissions and insurance charged by the AFP). In the meantime, the employers’ rates were relaxed and, in the end, they ended up paying less money than they did before the reform.

    This is only one of the most widely discussed aspects of the pensions’ reform, since there is also the additional fiscal problem that it has generated, the transference of the administrative costs and the worker’s risks, or the excessive rates charged to the workers who decided (or had to) remain under the ISSS program. The most recent increase on the pension system’s rates demands the necessary examination of some of its main characteristics and impacts: the changes in the rates (including the introduction of the AFP’s commissions), the impact over the worker’s net salary, and the taxes derived from the reform.

    A first implicit objective of the system’s temporary duties was to drastically reduce the contribution of the employers. In addition, one of the dispositions was to increase the workers’ payment rate in over 225%, and charge them with the administration expenses. In fact, the rates paid by the employers have gone from 7% from the workers’ salary in 1996, to 5% in 1998, 5.5% in 1999, 6.5% in 2000, 6.5% in 2001, and 6.75% in 2002. In the end, this will be a relief for the employers who paid less during four years, and will end up paying less than they did before.

    As a counterpart, the workers contribution went from 1% to 3% between 1998 and 2001. While for January 2002 the new rate will be 3.25%, an increase of 225% will be experimented; additionally, they have to pay the bill for the pension’s administration system through a commission payment for the AFP and for insurance. The total amount is presently 2.75% from the salary in the AFP with the largest number of members. At this moment, a worker pays close to 6% from his salary, a 500% more than he paid in 1996, when it was only 1%.

    As it can be inferred, the increase has had a major impact over the workers’ salary. An employee with an average salary –2000 colones a month, for instance- has gone from paying 20 colones as a contribution to the pensions’ system in 1996, to a 120 colones payment in 2002. This means an additional deduction of 5% out of his salary, an amount that does reduce even more his salary. The former aspect would not be a problem if the money would stay at in the worker’s account. However, this is not so: only 65 colones (3.25% will go to his individual account. The remaining 55 colones (2.75% from his salary) are a commission and an insurance fee. On the other hand, the employer of this fictitious worker would have gone from paying 140 colones in 1996, to pay 135 colones en 2002, that would also increase the worker’s individual bill.

    It must be said that the taxes attributable to the reform of the pensions’ system is another element that makes you doubt of its qualities, its design and its imposition. According to FUSADES, between 2000 and 2004 it is planned to increase the state’s contribution to the system of pensions from $21 million up to $383.4 million. This means an enormous total increase of 1725%, speaking in GNP terms, this means that the state’s contribution would go from 0.2% to 2.2%, between the same years. These contributions respond to the transference of the workers’ contributions to the system of the state until 1998. Considering the precarious situation of the public finances (in 2001 the deficit went up to 3.5% from the GNP), there is no doubt that the load placed by the new system turns itself into an element that affects in a negative way the efforts made to correct the fiscal deficit.

    In summary, the system’s reform had a regressive character, it has put a heavy load on the employee’s shoulders, and it has reduced the one of the employers. In addition, the reform has not contributed to balance the public finances; instead, it has supported the imbalance tendencies, putting unnecessarily heavy loads over the shoulders of the public expense.

    At the former public system of pensions, the worker paid less money, which is something that without a doubt affected the financial sustainability –without mentioning the evident administrative and managerial deficiencies. In fact, one of the bulwarks of the reform has been to increase the rates of the pensions’ system and to promote the participation of the private business companies in its administration. This can motivate us to think that, after all, the alleged untenable financial situation –and the low retirement pensions- that justified the reform would have been easy to overcome without measures such as the ones that were implemented, which have left the state and the workers in disadvantage.

    If the reform would have contemplated a financial sustainability, without necessarily leaving the state out of it, the profits that the AFP companies presently receive would now be going into the state, the administrative fees could be lower, and the unnecessary pressure would have not been made on the public finances. Unfortunately, during 1996, as well as today, the transcendental decisions over most of the population are carelessly made, even if that means to put most of the decisions’ weight over the working class sector’s shoulders.
 
 
 

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