Spain and the United States - Real Instituto Elcano

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SPAIN AND THE UNITED STATES
Exhibit 7.6 Labour Productivity per Person Employed (EU-25 = 100)
quality. Multinationals are impressed by the quality of Spain’s executives but
increasingly worried by the gap that is opening up between their skills and
those of workers on the shop floor. Spain is at the bottom of developed
countries in terms of the educational results of its students: 33% do not
complete their upper secondary education compared with an average of 21% in
all OECD countries.
What is of particular concern for the future of Spain is that countries with
a lower per student level of expenditure, such as Hungary and Poland, have
better educated workforces. Spain’s high-tech exports account for only 11% of
its total exports of manufactured goods, compared with 30% in Hungary (see
Exhibit 7.5). Another indicator of Spain’s low level of innovation is its number
of patents per million inhabitants, which in 2001 (latest year available) was 18,
compared with an EU-25 average of 109 and the US’s 95.
The combination of higher wage increases in Spain – the result of a
persistent inflation differential with the EU-25 (a full percentage point in 2004)
and wage-setting and indexing mechanisms that set a higher floor for nominal
wage growth than in other countries and very low productivity gains – is
eroding competitiveness. The modest labour productivity reflects, among other
factors, very strong job creation, which is something very positive and has
been the driving force behind Spain’s exceptionally long period of economic
expansion. This period has lasted much longer than most people envisaged and
has substantially reduced the high unemployment rate to below 10%, almost in
line with the EU-25 average (see Exhibit 7.6). Employment increased by 2.7%
in 2004 and apparent labour productivity was only 0.4%. Spain’s productivity
per hour worked dropped from 82.2% of the US level in 1991 to 75.3% in
2003, according to the Bank of Spain. 6
6. See the table on p. 24 of the Bank of Spain’s 2004 Annual Report.