Spain's productivity-pay gap that no one is closing

Spain's productivity-pay gap that no one is closing

An anonymous chart circulating these days shows a damning fact: since 1973, productivity in the United States has soared — with occasional pauses — while real wages have barely moved. Although the image is American, it has peine the debate in Spain, where the pattern is similar but with an aggravating factor: a tax system that takes up to 60% of what you earn through income tax, VAT and the rest, and a labour market stuck in low value-added sectors.

Working more to earn the same

The analysis is almost unanimous: since the 1973 oil crisis, productivity has grown steadily in developed economies, but the purchasing power of the average wage has stagnated. "Every year we produce more to earn wages that fail to beat inflation," one participant sums up. In Spain, the problem is made worse by the scarcity of high value-added industry, which prevents productivity gains from reaching workers' pockets.

The discussion, however, is not a calm one. Some question the very measurement of productivity: "Number of emails per hour?", one user quips. Others point out that measured productivity is only apparent, the result of precarious employment and the externalisation of costs. An article titled precisely "An only apparent productivity" is cited, questioning whether the data really reflect an increase in efficiency or simply a redistribution of work.

The taxman eating your effort

Taxation emerges as an additional burden. With taxes that can exceed 60% of gross income (income tax, VAT, social security contributions), the average worker sees their purchasing power cut far below what their productivity would suggest. The example is graphic: a flat that cost 3 million pesetas — about 18,000 euros today — generates rent of 1,500 euros a month. In other words, the effort required to pay for housing has not eased even though the economy produces far more than it did 50 years ago.

The unsettling fact: while productivity has multiplied, Spanish GDP has accumulated 22 years of virtual paralysis in real terms, according to one participant. Between governments that raise taxes and others that fail to adjust tax brackets for inflation, the result is that, despite working longer and harder, it is increasingly difficult to make ends meet. The chart does not lie, but no one in power seems willing to look at it.

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