- Real per capita household income is 0.7% below that of 2007 in Spain, the third worst country in the OECD
The Spanish Government's National Office for Foresight and Strategy, a body created by Prime Minister Pedro Sánchez in January 2020 to analyse the economic challenges facing the Spanish economy and set the objectives to which the country aspires by 2050, has admitted that there are many economic indicators in which Spain has not only failed to make progress in the last five years but has even made progress in the last five years.It's gotten worse.
This is stated in its 'Country Compass', a monitoring table of 50 economic, social and environmental indicators used to measure economic development, which shows that the gap in per capita income in Spain with respect to the eight most important powers in the EU (Austria, Germany, Belgium, Denmark, Finland, etc.). France, Countries and Sweden) has worsened since 2018 when Sánchez arrived at the Moncloa. Specifically, Spain's GDP per capita at the end of 2022 is 23.8% lower than the average for these countries, when in 2018 it was 21.1% lower.
This Office, which is headed by Diego Rubio and has the advice of experts and economists in the country, set itself the objective in its 'Spain 2050' report that the gap would be reduced annually to reach 18% in 2030, 15% in 2040 and 10% in 2050, but the worsening suffered during the pandemic has not yet recovered and the Executive does not expect to reach 2018 levels at least until 2026.
Along with this setback, this body located in the Cabinet of the Presidency of the Government, in the Moncloa Palace, and which reports directly to the president and his chief of staff, also recognizes that there are other important indicators that have remained unchanged, such as labor productivity. At the end of 2022, they stood at €42.18 – in constant terms at purchasing power parity – compared to €42.03 in 2018. The aim is to make it grow to 46 euros by 2030, but for the moment it has not resumed the upward path that was projected.
Different institutions such as the OECD have warned Spain that it must take into account this stagnation in productivity when putting measures such as the increase in the minimum wage or the reduction of the working day on the table.
Regarding the latter, the Executive proposed in 2020 to reduce the working day so that it would gradually resemble the European one, but there have been no improvements in this either. In 2018, weekly working hours were 37.7 and at the end of 2022 they stood at 37.6. The Government wants this average working day to fall to 35 hours in 2050, in line with the evolution recorded in the EU, hence in the investiture agreement PSOE and Sumar have agreed to reduce the maximum allowed working day to 38.5 years next year and to 37.5 from 2025.
Moncloa recognises that in the last legislature there has been no change in the percentage of people in Spain who are satisfied with their lives, according to its calculations based on data from the European Commission, since 87% of the total in Spain in 2023 are, the same level as in the country in 2019. The goal is for 93% of Spaniards to be happy with their lives by 2050.
Faced with these aspects in which the country has not made progress, the Moncloa Office does detect improvements in the employment rate - which has gone from 63.9% to 66.3% in 2022; in total expenditure on R+D – which has grown from 1.2% of GDP to 1.4% in 2021, the latest data available; the gender pay gap, which has narrowed from 11.9% to 8.9% in 2021; or in tax collection – which now represents 39% of GDP, compared to 35.4% in 2018.
This last indicator has deviated from the path that the Office had set as a target, growing much more than expected since the pandemic. By 2050, experts project that it will stand at 43% of GDP.
There has also been progress in the share of employment held by small companies - which has fallen from 45.3% to 44.3% - while the proportion of employees in large companies has increased, from 31.3% in 2018 to 32% in 2021.
Guide to Measuring Development
According to Moncloa, these indicators allow citizens to "check, in a very visual and intuitive way, how much progress Spain has made in each area in recent decades, and how much more it should progress to converge with the most advanced countries in the EU by 2050". These indicators are used because they are representative to determine the progress of a country in the medium and long term, they are quantitative and are built with open data, with European coverage and recurrent publication, which allows them to be monitored over time and to make comparisons with the rest of the EU countries.
Given that inflation is the biggest problem and threat that the Spanish economy – as well as the European ones – has had in the last two years, the Foresight Office explains why it has not been included. First, because inflation responds above all to economic activity and employment – which are monitored – and to unexpected events, and, second, "because it is not intrinsically bad or good (as poverty is, for example)".
"In our recent history, there have been periods of economic growth and improvements in the working conditions of citizens in which inflation rates were relatively high. And vice versa: there have been periods of intense falls in inflation that could not be considered positive (as opposed to the recent increase) as they were the reflection of an economic crisis (reduction in activity and increase in unemployment). In other words, the ups and downs in inflation cannot be interpreted as "good" or "bad" consistently over 40 years of history. That's why it doesn't serve as an indicator for the compass," they detail.
- Pedro Sanchez