IMF: Spain the only major euro economy losing productivity since 2018

The IMF identifies Spain as the only major eurozone economy to have lost productivity since 2018, with unit labour costs growing at 3.4% a year. The figure calls into question the competitiveness of the Spanish model in a high interest rate environment.

The report that has been circulating on social media this week is nothing new, but it is an uncomfortable reminder. The International Monetary Fund places Spain as the only major eurozone economy to have lost productivity since 2018. It is not a collapse, but a slow trend that builds up year after year and now intersects with another figure: unit labour costs are growing at 3.4% a year, above the European average.

## What the IMF figure actually says

Productivity measures how much is produced per hour worked. When it falls, every euro of salary becomes harder to justify with output. Spain is not an isolated case in Europe, but it is the only large economy that has not recovered its pre-pandemic level. Germany, France and Italy, with all their problems, have maintained or slightly improved their hourly productivity.

The IMF is not talking about catastrophe, it is talking about divergence. While employment grows strongly, GDP per hour worked stagnates. That means growth is based on hiring more people, not on producing more with the same people.

## Labour costs at 3.4% and the impact on margins

Unit labour costs are rising 3.4% a year. With inflation already moderate, that is a figure that either eats into business margins or gets passed on to prices. In sectors such as tourism or construction, where productivity is low by definition, the adjustment is harder.

The Banco de España (Spain's central bank) has already warned that this gap with the eurozone can erode external competitiveness. It is not a problem of high wages, it is a problem of output per hour failing to keep up.

## Why it matters beyond the headline

Low productivity is not an abstract figure. It determines how much real wages can rise without fuelling inflation, how much the state can spend without going further into debt, and how attractive Spain is for investment that is not just bricks and sunshine.

The IMF is not calling for cuts, it is calling for reforms that raise capital per worker and training. Without that, the 3.4% gap in labour costs becomes an annual burden.