The political trench is also polarizing the analysis of the Spanish economic situation. No nuances: either everything is going very well or absolutely very badly. Despite the positive data, the latest two days ago, an annual growth rate of 2.7% in the second quarter, the decline in unemployment and the increase in employment, the debate has focused on the theoretical artificiality of that dynamic, which would derive exclusively from the simple accumulation of more immigrant workers, without any real improvement in the economy, especially regarding citizens’ income. Nor changes in the model, always centered on tourism and low-value services.
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A synthetic summary of that criticism was made by Alberto Nadal, deputy secretary of economy of the PP, with a couple of tweets last Tuesday, after learning about the latest Active Population Survey (EPA) for the second quarter of this year, which showed that the Spanish economy had created 510,000 jobs during the last year. Nadal emphasized that of these, “122,000 are Spaniards and 388,000 foreigners or dual nationality” and concluded: “what is happening is that the Spanish economy is growing extensively due to immigration and public spending and not due to productivity. That is why Spaniards do not perceive an improvement in their well-being, real net wages are falling and prices keep rising..”.
In truth, immigration has been the differential factor of the economy in recent years. The European Central Bank (ECB) attributed 80% of the growth between 2019 and 2024 to it. Multiple studies point in the same direction, to a greater or lesser extent.
But, once its importance is recognized, is it possible to glimpse other effects of that economic growth and immigration on the native population and the very productive structure of the Spanish economy? And on the population’s standard of living? We leave aside the advantages derived from growth itself, such as lower debt financing costs, currently below those of France.
The entry of foreign labor always initially has a negative effect on productivity, especially in countries whose economy has historically had low productivity. Most migrants tend to have low labor qualifications and enter the lower positions of that market. It also affects business investment, which, faced with the prospect of abundant and cheap labor, tends to be less capital intensive.
Non-tourist service exports, those with higher added value, already exceed those of tourism
But, just as the structure of the Spanish economy emerged from the last major financial crisis with clear signs of structural change, especially the disappearance of a persistent and growing current account deficit (exports versus imports of goods, services, and income) to now show a permanent surplus, there are elements that could lead one to think that something similar is happening now in other areas.
The element most mentioned by economists is the takeoff of non-tourist services (to companies, professionals and support, financial, consulting, engineering, etc.), especially those linked to the digital field and whose exports already exceed tourism, the latter sector having reduced its weight in that export item by 13 points over the last five years, down to 47%. In 2008, it represented 80%.
Despite this, the weight of these service exports in the economy still lags behind most European partners, except Italy, according to BBVA Research, partly due to insufficient investment in R&D, the mismatch between training and necessary skills, and the size of companies. There is still room for improvement.
Despite this, the momentum of these activities reflects both technological progress and the quality of digital infrastructure as well as increased productivity. This, in recent years, especially since 2022, has advanced somewhat more than that of most European partners, despite still being far from their level, 7% below.
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Improvement that is reflected in the structure of the labor market. Thus, since 2020, the advanced services and R&D sectors are the areas that gain the most weight overall, almost one point, while trade and hospitality lose half a point, although of the two, the latter continues to grow.
The native population climbs the occupational level, which should translate into income improvements
This evolution coincides with some changes in the educational profile of immigrants. According to the analysis of EPA data carried out by Manuel Alejandro Hidalgo, economist at the Pablo de Olavide University of Seville, the immigrant profile has undergone significant changes from the first migration wave from 2000 to 2007 to the current one.
The weight of those with higher and medium education has risen 13 points, which the basic education bracket loses. Regarding their occupation, they have gone from being only 9% in advanced services and information and telecommunications to 22%. In contrast, the number of those working in trade and hospitality has grown, almost doubling and reaching 38%. A polarization at the extremes of the scale.
Something that also generally happens with native workers, as the high education level is the one that grows the most as employment increases, far ahead of low education.
An evolution that suggests that although immigrants continue to massively join low-skilled occupations, natives tend to climb towards better-paid and higher educational level occupations.
“These changes nuance the idea that per capita productivity barely grows; there may be large sectors of the labor market whose income is indeed increasing: natives, who get more qualified jobs, while new immigration, worse paid, drags averages down,” says Josep Oliver, economist and labor market expert. Hidalgo adds that “half of the employment created is already in high-wage segments and large companies.”
The immigration profile has changed and includes many more people with high education
And in the field of the most productive sectors, according to a study by Zoel Martín, from CaixaBank Research, the highest-paying sectors and therefore with more added value and productivity (finance, information technologies, manufacturing, education, water, health…) are those with the lowest unemployment, below 5%, and already concentrate 40% of total employment.
As Xavier Vives recalls, “the consolidation of these processes depends on improvements in investment, infrastructure, and productivity, with a critical point in education.” Catalonia’s failure in the PISA tests is a very bad sign of what the future may hold. So, not so good, but not so bad either.
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