Friday, March 31

Productivity fell in Spain for 14 quarters. Labor reform ignores the problem

Eurostat, the European statistical body, confirmed on Monday that productivity in Spain has chained 14 quarters with negative productivity. The period under review starts in 2018 and includes the full year of 2020.

Although the drop in productivity affected the whole of the European Union, with an evolution of -4.6 percent, in Spain the decline was greater. Specifically, -7.6 percent. The percentage is very similar to those registered by countries such as Malta, Czechia, Slovakia and Cyprus.

Among the greats of the euro, only Italy, with characteristics similar to the Spanish economy, registered a similar fall (-7.1 percent).

On the contrary, countries like Ireland (with an increase of 9.3 percent) and Luxembourg represent the other side of the coin. The Nordic countries recorded increases in productivity during this period, according to Eurostat.

So for the economies that lost competitiveness, not even the outbreak of the pandemic justifies their figures, since Ireland managed to increase productivity, understood as real output per unit of work (measured by the total number of hours worked), in 2020 .

For Miguel Ángel Bernal, an economist and professor at the FEF School, the fact that productivity is falling “because we are losing competitiveness compared to other countries” is a major problem for the Spanish economy.

Previous hours workedipan an even less competitive 2021

The number of hours worked, a key indicator to measure productivity, in 2020 was 6.1 percent lower than in 2019, despite the fact that in the fourth quarter it increased 10.06 percent compared to the third quarter.

The reasons must be found in the workers in ERTE. As Bernal recalls, “they are professionals who are in a kind of limbo, since they are not unemployed.” In fact, at the end of 2020, there were still 1.8 million people in this economic situation.

“Spain is a country of tourism and in 2020, there was no international tourism, which meant that many of the workers in the service sector were in employment regulation files, even if they were temporary,” says the economist.

That is, the fewer hours worked, the lower productivity. And this trend does not improve in 2021.

The active population survey (EPA) yields another piece of data for analysis: there are still 1,200 million hours worked less than in 2019 despite the decrease in unemployment and the increase in employed persons, which reveals that among the new contracts those of part-time, something that hampers the productivity of the economy.

Rising labor costs create another problem

To this situation regarding productivity must be added the increase in labor costs, which, according to Bernal, also hinders the recovery of productivity in the Spanish economy.

The economist refers to the rise in the minimum interprofessional salary (SMI).

And it is that the Minister of Labor, Yolanda Díaz (Podemos), will begin contacts with social agents in pursuit of an increase of between 20 and 40 euros to exceed 1,000 euros per month (currently it stands at 965 euros per month ).

On the other hand, the costs of the salary contribution will also put a brake on productivity.

Although this measure will not come into force until next year, its effects are beginning to be seen as it reduces the competitive advantage over other countries with lower costs. The companies will assume a surcharge of between 5.25 and 20.35 euros per month per employee, while the professional will be deducted from the payroll between 1.05 and 4.07 euros.

The objective of the measure, according to the Executive of Pedro Sánchez (PSOE), will be to refill the pension piggy bank.

The Bank of Spain points to the least productive sectors

Faced with this situation, the Bank of Spain advises acting urgently to increase productivity, since Spain “has registered extremely low levels in recent years.”

For this, it has identified those that are less productive, among which are the hospitality, trade, construction and extractive industries and the real estate sector. They are precisely those that occupy a greater percentage of the Spanish economic fabric.

On the other hand, to increase it, the body directed by Pablo Hernández de Cos bets on sectors less present in GDP, such as digitization.

The recent labor reform, which Congress validated after the error of a deputy from the Popular Party, does not include specific measures to address the problem of competitiveness in Spain.

The issue was also not present in Diaz’s previous negotiations with other parties or with unions and employers.