Debate: Marc Vidal links wages to productivity

Marc Vidal links wages to productivity, sparking debate

An economist argues that better wages require higher productivity. This seemingly innocuous claim has peine a rift: some see it as technical common sense, others as an elegant way to avoid discussing corporate profits. The disagreement is not about theory, but about who keeps the gains.

Marc Vidal’s thesis, shared in his talks and videos, holds that productivity is the variable that explains wages. If more is produced per hour worked, there is room to pay more. According to this view, the problem is that the Spanish economy generates little added value: too many bars, hotels, and real estate projects, with little industry and scarce investment in technology.

What is productivity and why is it used as an argument?

Productivity measures how many goods and services are generated with available resources: labor, capital, time, and land. A high-productivity economy typically has high per capita income and thus consumption capacity. Defenders of the economist’s thesis argue that without this increase, there is no sustainable wage rise, only redistribution of the same pie.

The most repeated objection is that productivity has already risen in recent decades, yet wages have not kept pace. Some argue that these gains have gone to corporate profits, speculation, or investments outside Spain. The banking sector, which has closed branches and reduced staff while increasing productivity per employee, is cited as an example of this decoupling.

Service sector and tourism weigh down productivity

Part of the analysis points to the productive model: a country focused on tourism and low-value-added services finds it difficult to increase productivity. Bars, hotels, and seasonal activities do not scale like factories. In these sectors, improvements are marginal no matter how much faster people work.

In contrast, another current notes that even in remaining industries, wages are stagnant. High-skilled jobs are paid barely above minimum wage, technical faculties are emptying, and annual reports denounce shortages of doctors and engineers. All this occurs while double-digit profits continue to accumulate.

Does lowering wages increase productivity?

No. Reducing wages does not raise productivity: it lowers labor costs and improves competitiveness at the expense of deteriorating job quality and disposable income. Confusing these concepts is one of the traps in the debate. If you lower wages and produce the same amount, the ratio improves, but the economy becomes poorer.

The counter-argument also circulates: paying more to highly productive workers incentivizes others to strive harder. If someone performing twice as well earns the same as someone performing half as well, the former will eventually perform like the latter. The logic is textbook, though it clashes with the rigidity of salary bands and collective bargaining agreements.

Labor cost as a business excuse

In industrial products, labor can represent between 8% and 10% of costs. Cutting wages by 10% reduces total costs by around 1%. With such figures, competitiveness is not fixed by trimming payrolls. Energy costs, tax pressure, and lack of R&D investment weigh much more heavily.

Some add that Spanish businesses prefer producing low-value-added goods in saturated sectors, hiring cheaply, rather than investing in automation, digitalization, or premium markets. The criticism is significant: if the model relies on cheap labor, productivity does not rise; spending is merely contained.

Nepotism and mismanagement as real brakes

Part of the analysis focuses on management. In small family-owned businesses, placing relatives in responsible positions is common, which can hinder decision-making and harm employees. In multinationals, selection is stricter, but the phenomenon exists nonetheless. The difference lies in who pays for the error.

Nepotism in administration and public companies is highlighted as particularly egregious, since taxpayers bear the cost. The discussion then shifts to public spending, intermediary agencies, and redundant entities, areas where figures are handled with more passion than rigor.

Investment, the variable almost nobody disputes

Productivity stems from investment. Not just buying expensive machinery, but also hiring good managers, building sales networks, developing software, or seeking alliances. In many cases, improvement is obvious, like replacing a hoe with a tractor; in others, it comes from specialization and doing things better.

The problem is that Spain has penalized the reinvestment of profits into productive assets through taxes for years, according to arguments made. If buying machinery is costly and savings are taxed, the rational business decision is to distribute profits or move them abroad. The ball returns to the economic policy court.

The experience of working outside Spain

A recurring testimony compares the situation with Switzerland, where salaries multiply those in Spain without the workforce being more productive or hardworking. According to this experience, the difference lies not in individual effort, but in the model, organization, and value placed on work.

In Spain, those who stand out by finding ways to do less movement for more output receive more workload, not higher pay. This perverse incentive discourages those wanting to improve. This is perhaps the most repeated criticism and the least answered from expert platforms.

What if the problem is not productivity, but who decides how existing output is distributed?