Spain scores lower in productivity than European neighbours 31/03/2008 00:00

Main engine of economy is made up of sectors with low added value such as construction, tourism and some services, but government says productivity is going up

31 March 2008

MADRID - When it comes to productivity, Spain scores worse than most of its European neighbours. The reason for this, experts agree, is because the main engine of its economy has been sectors with low added value such as construction, tourism and some services.

"It's bread for today and hunger for tomorrow," says Fernando Balcells, professor at the University of Barcelona. The Socialist government insists, however, that things are getting better.

"In the fourth quarter of 2007, productivity was up 0.94 percent, compared with 0.14 percent at the beginning of the last legislature," says the finance ministry.

This progress occurs, however, in a context in which unemployment is on the rise. And since productivity ties the amount of wealth generated to employment, when jobs are destroyed, it usually goes up, as there are fewer employees to cover production.

"The sectors that are first to cut jobs are the ones with low added value, like construction. This doesn't mean that they're doing their homework," says the professor Rafael Pampillón.

"The relationship isn't that simple," replies the finance ministry, noting that there are three more million people working than in 2004.

For the economist Xavier Sala i Martín, problem areas include merger investment in innovation and technology, an educational system "where kids don't learn to have ideas and young people would rather be bureaucrats than entrepreneurs," besides the lack of lifelong training, red tape and deficient infrastructures.

Teresa Garcia-Milà, a professor at Pompeu Fabra University, adds to this list the "dual job market that exists in Spain, where there's lots of temporary employment and lots of inflexible permanent contracts, with expensive layoffs and uncertainty about why any such decision should be made."

[Copyright El Pais 2008]