Translation of my original article in spanish economic blog El Captor:
Much has been written about the lack of competitiveness of the Spanish business fabric and its discrete level of exports relative to other economies of similar size. The reality is not as bad as some people would have us believe, but all correlation of two variables always has a dual interpretation. Note this graph:
Exports to GPB (%)
Source: World Bank
Spanish figures does not seem too bad, we export more than France, Italy and Greece, at least in relation to GDP. At first glance, it seems that the situation has improved, but the double interpretation may reflect that this growth is a mere mirage, because we really export a little more, but our GDP is much lower. You know, numerator and denominator. Mathematics are well playful ...
I wanted to show you this example as an introduction before speaking about labour productivity. What does labour productivity means? The International Labour Organization has several definitions, but the commonly accepted, at least in this country called Spain, is as follows:
Labour Productivity = Total Production of Goods and Services / Total Salaries
Right. What does competitiveness mean? Easy, it is the ability to compete, either by price or by innovation. Spain is Spain, again ...
"We need to increase productivity and competitiveness" they said, and they have forced us to take the easiest route: lets take an axe to wages, and voilà! we are already productive and competitive.
And yes, we are productive, but are mediocre. We are mediocre because instead of investing in R & D, training employees and retaining talent in order to improve, grow and produce more and better (increasing the numerator of the definition of productivity), we opted for precarious contracts, unworthy salaries, job insecurity and underemployment (reducing the denominator). How cold, wise the mathematics are! Spain is towards mediocrity today.
At the beginning of November, there were 4,526,804 unemployed in Spain. But also 5,752,040 workers earn 600 euros per month. In short, 10,278,844 people, with name, with family, who only want to work with dignity, cannot consume nothing in Christmas time. 55% of working-age Spaniards cannot consume.
As Keynesian, I firmly believe that the demand and consumption are the engine of the economy. With this disturbing figures and these policies, the engine is not only seized up: There is no reasonable way to overcome this crisis. We need growth policies, wage increase and retain talent immediately, or the painful economic stagnation is inevitable. It is being warned in time...