Only the automotive sector withstood the thrust of services in the last five decades. Spain has undergone a tertiarization of the economy since 1980 – the same as what happened in other large neighboring countries – which has led services to represent more than half of the activity.
“The branches of services have acquired greater weight within the country’s economy and employment, to the detriment of industry and agriculture,” details a report by the General Council of Economists and the Spanish Chamber of Commerce that analyzes the evolution since the 1980 to now. Why has automotive endured? “A very powerful ecosystem has been created in the automotive sector that started with the arrival of companies attracted, among other things, by cheap labor,” replied Salvador Marín, an economist at the General Council of Economists and one of the co-authors of the report.
Companies that landed in search of low wage costs built a network over time that attracts more investors. An example is the recent award to Sagunto of one of the two battery plants of the Volkswagen group in Europe.
According to the study, between 1980 and 2018 the automotive industry grew by 77%. At the start of the 1980s, motor activity represented 3.3% of GDP and almost 40 years later, 5.8%. On the other hand, it is surprising that in recent years, when the weight of the sector in GDP has continued to increase, employment has fallen by almost 50,000 people. “It falls because a lot is invested in RD, with which processes are improved,” says Marín. It is a book example of productivity gains. More activity with fewer workers.
And the same can be seen, but in the opposite direction, in tourism, where, despite maintaining its weight in the economy as a whole or even reducing it, hiring has skyrocketed in recent years. In 2020 there were half a million more workers than in 1995 while their weight in GDP fell. Marín points out that it is normal because the number of tourists has grown exponentially and “we must attend to them.” If we leave the pandemic aside, between 1995 and 2019 the number of tourists in Spain has more than doubled, going from 54 million to almost 130 million (see graph).
The tourism data, in which the weight of employees in the total grows in greater proportion than their contribution to GDP, is an example of how the overall productivity of the economy does not increase. That is why the Bank of Spain or entities such as the Cercle d’Economia have been warning for weeks that Spain is moving away from Europe in terms of GDP per inhabitant.
Although improving productivity is perhaps the main challenge for the Spanish economy, Marín recalls the important driving role that tourism plays in other sectors such as transport or services.
Apart from the automotive sector, the main sectors that have gained weight in GDP between 1980 and 2018 are the financial sector with a growth of 161%. The other areas with strong relative growth are the aggregate sector of health and education, which increased slightly more than 53% in the period, and the block that brings together the rest of the services, with close to 42%.
The areas in which there has been a setback in the last four decades are mainly agriculture and the food industry, which decreased by around 42% and 39%, respectively, “although both continue to stand out in relation to their national weight at European comparative level”, reads the report. Agriculture weighs 2% and the agri-food industry 6%.
In the interval from 1995 to 2020, in the sectors that increased the number of people employed the most was in services – without counting tourism or finance – with an increase of almost 100%. Then comes energy (with an increase of 82%) and tourism (almost 69% more).
The report also highlights the role of trade opening abroad in recent years in economic development. “Exports in Spain grew to reach 41% of GDP at the end of 2022,” according to the study.
The performance of the economy in the period of the pandemic is also analyzed. The report maintains that “the aggregate primary sector was the only one that increased its sectoral GDP at the end of 2022 compared to 2019.” On the other hand, in that same period, the industrial and service sectors had not yet recovered the levels of the economy prior to the covid.
