Spain's immigrant amnesty will boost GDP and hours worked, but cut wages by 0.6%

Amnesty for half a million immigrants: more GDP at the expense of wages?

The upcoming regularization of around 500,000 foreigners who already live and work in Spain will, according to BBVA Research, bring an increase in GDP and hours worked, but also a 0.6% drop in real hourly wages. The composition effect explains the decline: low-paid employment will come to light, pulling down the average. The debate, however, goes beyond macroeconomics: what about GDP per capita, public services and housing?

The BBVA report: lights and shadows

The bank expects the regularization to raise Social Security contributions, hours worked and public revenue. But the average wage will fall by 0.6% due to the increased supply of workers in low-productivity sectors. This calculation assumes that all those regularized start paying contributions, something many consider naive: companies that had them working informally are unlikely to register them now that they have papers. The story of the 'industrial reserve army' resurfaces: cheap labor to push wages down.

The hidden costs: inflation, housing and services

More population without a corresponding increase in healthcare, education and housing infrastructure generates tensions. Public spending is not growing at the same pace: more hospitals and schools are needed, but no concrete plans are in sight. The housing market, already strained, will face greater demand. GDP per capita, already low by European standards, could plummet to Romanian levels in the next crisis, as some analyses suggest. The paradox: more people employed but fewer total hours worked (584,000 more employed and falling hours) points to an economy of precarious jobs and low productivity.

Who really benefits from the measure?

Employers are the first to applaud: they get regular workers without raising wages. The unions, silent on the minimum wage, do not protest. Meanwhile, native workers and immigrants legalized years ago see their conditions worsen. The question nobody answers: how much will we pay in additional taxes to sustain the services this new population will demand?

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