Every day the workers in Spain are older, because there is a poor generational transition, which has a pernicious effect on the productivity of the economy and on the increase in public spending. Since 2000, the average age of employees has risen by more than six years to 43 and a half, according to calculations by Funcas. For the rest of the workers (those who do it on their own account, essentially self-employed) they have grown a little less: four years, up to 48.
The causes of this aging population are the drop in the birth rate and the increase in longevity. The recomposition of the population by age will have effects not only on the size of the labor force or the evolution of productivity, but also on the demand for goods and services or on the priorities in public spending by governments, reflects the Funcas report published yesterday in Papeles de economia española.
Juan Francisco Jimeno, one of the authors and researcher at the Bank of Spain, explains that the loss of productivity when the workforce ages takes place in two ways. The first – points out Jimeno citing the economic literature – is that when workers are older there is less innovation in processes because they opt for the saying “it has always been done this way”. The second is that it is young people who have the most options to thrive and move up in companies, so they improve the way they do processes. The report states that it is the young people who have the most salary increases, because they are promoted within the companies.
The low productivity growth is one of the major problems of the country’s economy and is the main reason why Spain has moved away from Europe in terms of GDP per capita over the last fifteen years. Funcas’ analysis coincides with that of CaixaBank Research, in which it was warned that the arrival of the baby boom generation in retirement would reduce the growth of GDP per capita by 0.5 percentage points per year during the next two decades
The study points out that aging is particularly intense among non-salaried workers, men, civil servants, employees of small companies and autonomous communities in the north-west of the Peninsula. Regarding the distribution by autonomy, Jimeno points out that “it is empty Spain where there is a greater growth in the average age of workers”. In Catalonia, for example, the average age is just under 43, while in Asturias it is over 45.
To combat the phenomenon of the aging of the working population, the Funcas study points to the promotion of the birth rate and the management of immigration as key measures. As a general rule, workers arriving from abroad tend to be young.
In terms of labor income profiles by age, there is a slowdown in earnings from the age of 45 and a notable drop from the age of 60 suggesting a sharp decline in productivity in these age groups.
If between 2002 and 2022 the employed population increased by around 18%, the employed population aged 50 and over multiplied by more than two, while the employed population aged 16 to 29 was reduced to half.
The report studies the evolution of the birth rate in Spain, one of the lowest in the OECD, caused, among other reasons, by labor instability, which derives from the high incidence of temporary contracts, and the ‘high unemployment in Spain. In addition, the low labor flexibility and, in particular, the high incidence of split working hours, discourages births among women with a greater opportunity cost of leaving the labor market, as is the case of who have university degrees.
Funcas’ work states that the measures with the greatest potential to raise birth rates would be those that facilitate the reconciliation of work and family life. In particular, those that reduce the cost of mothers’ labor participation, such as, for example, the financing of nursery schools or direct aid to working women, and also those that reduce the incidence of the split working day that does not favor birth , according to the report published yesterday.
