Productivity latest publications
The economy accelerated more than expected (to 1.1% q/q) due to strength in private consumption and construction. However, there are some less positive elements on the demand side, as growth was constrained by a decline in machinery and equipment investment and goods exports
On June 7, 2022, the European Parliament and EU Member States reached an agreement on the Directive on adequate minimum wages. Despite the arrival of this Directive, differences in minimum wages between EU Member States will continue to exist for as long as there is no convergence in productivity and employment rates.
Now that the minimum wage approaches the target level of 60% of the average salary, we need to rethink employment and training policies. If we don’t, the unemployment rate, investment and productivity growth could all take a hit.
Once the labor reform has been approved, the next step will be to evaluate its effects, although mostly they will only be seen in the medium and long term. The authorities must ensure that the fall in temporary employment does not come at the expense of lower growth in job creation.
Leaving aside divergences in the short term, a comprehensive, balanced approach must pay attention to all the underlying information on the ongoing recovery of the Spanish economy that indicators such as GDP and employment can offer us.
Wages will attract close attention in the coming months. First, because rising inflation is placing wages under strain. Second, because there is uncertainty as to how much bargaining power employees and employers will have.
Spain is among the eurozone countries with the lowest productivity and least investment in intangibles. In the future, it must make use of digitization and NGEU funds to increase intangible assets, particularly R&D and training of human capital — essential for driving productivity.
Digitization has boosted productivity but the impact has been heterogeneous by country. Those with more intangible assets exhibit more sustainable growth. Spain should take advantage of the digital impulse and the NGEU funds to increase the capital in intangibles and to improve productivity levels.