The Spanish economy is moving away from Europe. It is not that the GDP has stopped growing, it is growing, but this increase is mainly supported in jobs with low added value or with part-time occupations. The gap between Spain’s GDP per inhabitant and that of Europe has gone from 9% in 2006 to 17% last year. Last week the Economic Circle put in the middle of the public debate this impoverishment of Spain (and Catalonia) with respect to the euro zone over the last fifteen years, which the Bank of Spain had certified a few days earlier in its annual report .
The causes are simple: “50% of the gap is explained by unemployment, and the other 50% by productivity”, reflects Miguel Cardoso, chief economist for Spain at BBVA Research. The paradox is that, when membership increases, the gap with Europe in GDP per capita grows at the same time because the jobs that are created are of low added value. More wealth is generated in terms of GDP, but each new worker individually produces less than the previous ones, so the average goes down.
An easy example is the hospitality industry. If the new employment occurs in bars or hotels, the GDP grows in aggregate terms but the average per inhabitant does not. This widens the rift between Spain and Europe. Another way of seeing the same problem: “in Spain we need more people to produce the same level of GDP as other countries; we have low productivity”, reflects MarÃa Romero, Afi analyst.
As Cardoso explains, “in Spain the hours worked have not yet recovered”. In the first quarter of the year there were 20.4 million employed, up from 20.1 million at the end of 2008. The problem is that despite having more employed people, the hours worked are almost 20,000 less than at that time. The BBVA Research economist attributes this to the problems of energy-intensive sectors such as steel, ceramics or the automobile, which are not at 100%.
The UAB professor, Josep Oliver, warns that for 30 years we have been in the tertiary sector of the economy with unemployment rates that have on several occasions exceeded 20%. “It doesn’t happen in any other country around us”, he adds. Jobs in the tertiary sector such as tourism services tend to have the most precarious salaries and the least added value. Another of the elements is the entry of immigrants: “of the families that arrive, half are not employed, and those who are are mostly in jobs with low added value”. This phenomenon pushes down GDP per inhabitant.
Xavier Vives, professor at IESE, is one of the members of the board of the Cercle d’Economia who have focused this year’s Opinion on this issue: “the problem is clearly that they have not been carried out the structural reforms necessary to raise productivityâ€. In Fedea, the director Ãngel de la Fuente believes that the underlying reasons are difficult to discern although he notes that “I have the feeling that things are not going well and the reforms of the central government are not the most appropriate”. From London, Àngel Talavera, from Oxford Economics, believes that “the production model in Spain will hardly allow it to converge with Europe in GDP per capita beyond 90%”.
The majority of economists consulted are of this opinion and believe that what happened in the 2000s when Spain approached Europe was a mirage as a result of the real estate bubble and the bullion fever, which fired the employment and left the unemployment rate at levels as low as they had not been seen in many years.
“That momentum of the 2000s was false, as it was based on huge debt and real estate, which is a job with low added value,” Oliver points out. The UAB professor calculated that 45% of GDP gains between 1998 and 2007 were thanks to immigrants.
In the chapter on solutions, the opinion is unanimous and it goes for strengthening education in such a way as to adequately match supply and demand. “Companies can’t find workers and students study things that are not in demand,” says Cardoso, who calls for more investment. “Spain invests the same as Austria in training the unemployed when there are three times as many unemployed here,” he adds.
It is surprising in any case that this lack of convergence with Europe is not a usual topic of debate and everything revolves, instead, around employment data or GDP growth. “We are subjected to the systematic propaganda of the governments”, says Vives.
