Only the automotive sector withstood the push of services in the last four decades. Spain has suffered a tertiaryization of the economy since 1980 – just like what happened in other large countries in the area – which has meant that services represent more than half of the activity.
“The service branches have acquired more weight in the country’s economy and employment, to the detriment of industry and agriculture”, details a report from the General Council of Economists and the Chamber of Commerce of Spain which analyzes the evolution from 1980 until now. Why has the automotive industry endured? “A very powerful ecosystem has been created in the automotive sector that began with the arrival of companies attracted, among other things, by cheap labor”, replied Salvador Marín, economist of the General Council of ‘ Economists and one of the co-authors of the report. Companies that landed in search of low labor costs eventually built a network that attracted more investors. An example is the recent award in 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 beginning of the eighties, 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 the GDP has continued to increase, employment has decreased by almost 50,000 people. “It’s falling because a lot is invested in R&D and, therefore, processes are improved”, points out Marín. It is an example of a productivity gains book. More activity with fewer workers.
And the same can be seen, but in the opposite direction, in tourism, in which, despite maintaining its weight in the Spanish 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 was falling. Marín points out that it is normal because the number of tourists has grown exponentially and “they need to be taken care of”. If we leave the pandemic aside, between 1995 and 2019 the number of tourists in Spain has more than doubled, from 54 million to almost 130 million (see the graph at the bottom).
The tourism data, in which the weight of employees on the total is growing at a greater rate than their contribution to GDP, is an example of how the overall productivity of the economy is not increasing. 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 the improvement of productivity is perhaps the main challenge of the Spanish economy, Marín recalls the important driving role played by tourism in other sectors, such as transport or services.
Apart from automotive, 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 added health and education sector, which increases by a little more than 53% in the period, and the block that brings together the rest of the services, with nearly 42%.
The areas in which there has been a decline in the last four decades are mainly agriculture and the food industry, which decrease by about 42% and 39%, respectively, “although both continue to stand out in relation to their national weight in terms of European comparison”, says the report. Agriculture weighs 2%, and the agri-food industry, 6% of the country’s activity.
In the interval from 1995 to 2020, the sectors in which the number of employed people increased the most were services – not including tourism or finance -, with an increase of almost 100%. Next comes energy (with an increase of 82%) and tourism (almost 69% more).
The report also highlights the role of foreign trade opening in recent years in terms of economic development. “Exports to Spain grew to reach 41% of GDP at the end of 2022”, according to the study.
The performance of the economy during the pandemic period is also analyzed. The report states that “the added primary sector was the only one that increased sectoral GDP at the end of 2022 compared to 2019”. On the other hand, in this same period, the industrial and service sectors had not yet recovered the levels of the economy prior to covid.
