MARAVILLAS DELGADOWhen it comes to numbers, is everything that glitters gold? The International Monetary Fund predicts that Spain will be one of the advanced economies that will experience the greatest economic growth during 2023 and 2024, ahead of the United States, Germany, France or Japan. At the same time, for months now, the data on the Spanish labour market have been positive and unemployment has not been so low since mid-2008, before the financial crisis impacted the real economy. Despite this, the situation of many citizens is precarious and resolving it requires profound actions that go beyond the figures. It is true that part of the current economic growth responds to a change in the structure of production, thanks to a greater weight of the export sector, which has more productive and innovative companies. However, the recovery of pre-pandemic activity levels is responsible for another large part of the increase. The Spanish economy has grown robustly over the past two years, but only in the first quarter of 2023 did it manage to bring GDP back to pre-Covid-19 levels. The evolution of the population pyramid also influences the good results of the labour market. Spain is ageing and the percentage of the population between 16 and 65 years old is decreasing. While in 1980 there were five people between 16 and 64 years old for every person over 65 years old, in 2021 this ratio fell to three. As a result of this decrease in the working population, there are fewer people for each available job. In absolute terms this fact contributes to lower levels of unemployment. The figures, therefore, are positive. Is the quality of economic growth and the jobs created also positive? To fully understand the health of the Spanish economy we must analyse other factors that drive economic and social prosperity. “Although productivity is not everything, in the long term it is almost everything,” said Nobel Prize winner in Economics Paul Krugman. This is probably the key. According to the OECD, in 2022 labour productivity in Spain was lower than the European Union average. What is striking in this case is not the absolute figure, but its lack of growth over the years. Between 2010 and 2022, labour productivity in Spain increased 8% less than the average in Europe, ranking 20th out of the 27 countries of the Union. This means lower economic growth in the country and, therefore, less investment, lower wages and fewer social services, innovation and progress. In the last decade, Spain's GDP grew by an average of 0.8% and, in contrast, the average percentage in the European Union was 1.4%. This difference, sustained over time, ends up being very significant. An economy that grows at 3%, for example, would double its size every 24 years, while when growth is 2%, the same case would need twelve more years to double. In 2021, the Government identified low productivity as the greatest challenge facing the Spain 2050 strategy. Improving in this area is essential not only for purely economic indices, but also for increasing the quality of life of workers. The question is not only whether or not there is work, but the competitiveness of employment. The higher the level of labor productivity, the higher the salary received by those who perform those jobs and the greater the capacity of the Government to generate greater coverage. This is where, mainly, the quality of life of citizens lies. The good economic data of recent years should not mask the challenges facing the Spanish economy. An economy that is not able to maintain sustained increases in its productivity will not be able to face the challenges of climate change, digitalization, demographic transition, or the repayment of its debt. Therefore, increasing the productivity of the Spanish economy is the key to making quantity synonymous with quality. Óscar Guinea is an economist at the European Centre for International Political Economy and Isabel Pérez del Puerto is a journalist. Follow all the information on Economy and Business on Facebook and Twitter. Twitteror in our weekly newsletter
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