The Europe Crisis is extremely dire and one of the countries, Spain is suffering.

Spain has a high budge deficit and its banks need tens of billions of rescue loans. However, the Prime Minister declined to cut pensions or freeze them. Instead, budget would increase payouts by 1% next year.

This can be justified, as Mariano Rajoy wants to protect his country’s 10 million retirees. Additionally, pensions have become a lifeline in Spain. The unemployment rate is 25% and higher among younger generations. This leaves many to rely on their parents and grandparents to support them.

However, pensions are nearly 40% of the public spending and 9% of the Spanish gross domestic product. Thus, it can be argued enhancing Spanish public pensions is one reason European debt and deficit problems are hard to fix.

It is debatable if Mr. Rajoy’s actions are a reasonable. On one hand, pension plans are reducing Spain’s ability to overcome the economic challenges. However, Spain cannot completely disregard the plans, as many people rely on the benefits.

I think Spain should continue to pay the pensions, but hold off on payout increases. Instead, the country should dedicate the payout increase funds towards increasing employment rates. More jobs need to be created so younger generations no longer need to rely on the pension plans. By doing this, the country can start to get back on its feet.

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