Sunday’s general elections marked significant changes compared to those held in 2019. Almost four million Spaniards once again trusted the two main parties that received 65% of the vote, 3 out of four members of Congress and 9 out of 10 senators. However, Spanish society is still very polarized into two blocs of right and left that do not understand each other and rule in the hands of the Catalan and Basque nationalist parties.
the Economy He played a minor role in the electoral campaign, whether in Sunday’s general elections or in the regional and municipal elections two months ago. It was emphasized that to achieve a sufficient majority for the Popular Party to rule the unemployment rate would need to exceed 20%, as it did in 1996 and 2011. The King faces a dilemma between accepting the installation of Alberto Núñez Figo as the most voted slate but with little chance of prosperity or one by Pedro Sánchez who needs the Unites per Catalunya seats for re-election. And the possibility of repeating the elections as in 2019 and 2016 is high.
Since the 2008 crisis, the Spanish economy has accumulated three serious structural problems that need changes in economic policy to be resolved: unwaged productivity growth, unstable wages and inequality, and high public debt. The solution of the three problems at the same time is very complex and will require a major program agreement between the two large parties, since it is necessary to include the autonomous communities in the agreement and the majority is governed by the PP. Unfortunately, the polarization of the campaign makes agreements similar to the Moncloa Accords of 1977 unlikely.
Productivity does not grow because the majority of Spanish companies do not integrate technology into the production of goods and services in the period of greatest global technological development of the past three centuries. The problem is concentrated in the size of the company and in the increase in the weight of companies with less than 10 workers in Spain, the weight of these companies is twice as high as in Germany, and they have half the productivity of small German companies and their average salaries are half that of medium and large companies.
The other problem is the rare development of the Spanish tech ecosystem. Spanish universities are a factory of bureaucracy. It will be necessary to carry out an in-depth reform of the Spanish university system, to maintain the influence of the faculty in the academic administration while professionalizing its non-academic administration and especially the technology transfer offices. In order for these projects to expand and grow, it is necessary to develop the capital market, tax-free selling, innovative buying and an in-depth tax review so that Spanish technology companies enjoy at least the same conditions as their global competitors. This requires a large national agreement that includes the autonomous communities.
If this succeeds, Spain in 2030 will be in a position to increase employment, stop talking about unemployment as a chronic problem and increase wages, especially for our young people. The pillars of the emerging state of Israel are also valid for Spain: agriculture, water, mobility, sustainability, renewables, and artificial intelligence. Since 2000, Israel has doubled employment, productivity, and average salary. Taiwan, South Korea and Ireland are the countries with which Spain must be compared and not with France and Germany, which have had worse development in their productivity than Spain in the last twenty years.
Our country is one of the few that has not developed a concentration of wealth in the 1% of its population. On the contrary, we are a rare bird in the world that has moved a significant part of its population from the lower middle class in the 1980s to the upper middle class now. But we have the problem of relative poverty in the 30th percentile with the lowest income, which has worsened since the 2008 crisis and is concentrated in immigrants. An immigrant is ten times more likely to be in poverty than a person born in Spain. We are one of the OECD countries that invests less in its human capital in companies and that manages active employment policies even worse. Unemployment insurance, especially long-term, minimum income, etc., should be adjusted and linked to incentives for active employment policies.
And last but not least, Spain has to cut back on its size Public debt And bring it back to the path of sustainability as our Portuguese neighbors did in the last decade. For this, it is necessary to increase the growth potential and employment rate and also to reduce the structural public deficit as required by the European Treaties and Article 135 of the Spanish Constitution. The new government will have to raise value-added tax on electricity, gas and food in the 2024 budgets. But it is necessary to contain spending on pensions and health care and free up resources for other items, in particular: education, universities and scientific and technological development.
The potential of our economy is enormous, but since 2008, we’ve been a country where stories don’t turn into action and results, neither in public nor in most of our companies.
Jose Carlos Diez He is a professor of economics at the University of Alcala