In recent months, various reports and analyses have argued that a part of the current economic problems stem from an excessive specialization in low value-added activities. However, this approach runs the risk of simplifying a much more complex reality and presenting the economy as a confrontation between "good" and "bad" sectors. The fundamental issue is not which activities are developed, but how they are developed. International evidence shows that countries with higher wages are not necessarily those that have eliminated labor-intensive sectors, but rather those that have managed to increase the productivity of their entire economy. It is not about reducing activity, but about improving what is being done.
Productivity continues to be the main determinant of wages in the long term. It is not about increasing wages, because if wages increase without an increase in productivity, we have increases in unit costs, a decrease in business margins, which also serve to make investments, and which will be reduced, leading to a loss of competitiveness, and therefore of activity and employment. Wages do not grow sustainably by decree, but thanks to higher productivity, which is what allows more value to be generated per worker. No country has managed to maintain sustained wage increases without parallel improvements in productivity. That is why a German waiter usually receives higher remuneration than a Spanish waiter, just as a Spanish waiter usually earns more than a Portuguese one. The difference lies not in the nature of the job, but in the economic environment in which it is developed: available physical capital, business size, technology, organization, training, institutional quality, and aggregate productivity. Some of which are considered levers within the National Pact for Industry 2026-2030.
This relationship between productivity and wages, which shows high levels of correlation, also explains one of the most relevant paradoxes of the Spanish economy. In recent years, Spain has registered relatively high GDP growth rates compared to other European countries. However, in several quarterly economic reports from Foment de Treball, we have already pointed out that this growth has been largely based on an increase in employment rather than an increase in productivity. When this happens, per capita income advances at a much slower pace than aggregate GDP and is very equivalent to its standard of living. This is why Foment proposed a roadmap in September 2025 for the improvement of the productivity and competitiveness of the Catalan economy.
Precisely here lies one of the most important lessons offered by the experience of Central and Eastern European countries. Poland, the Czech Republic, Slovakia, Estonia, Latvia, Lithuania, and Romania have experienced an extraordinary process of economic convergence with the European average over the last two decades. Their per capita income in purchasing power parity has increased significantly, to the point that some of these countries are now close to or above the European Union average.
This progress is not explained by them having massively replaced labor-intensive sectors with high value-added technological activities. The key has been something else: increasing productivity through investment, integration into European industrial chains, improving human capital, attracting international capital, business modernization, and improving public sector efficiency, etc.
In this context, it is particularly useful to recall Michael Porter's cluster theory. Competitiveness depends not so much on the sector as on the surrounding ecosystem.
The example of tourism is particularly illustrative. It is often presented as a low-productivity, low-wage activity. However, countries like Switzerland, Austria, or the Netherlands develop highly labor-intensive service activities with much higher wage levels than Spain. The difference is not the sector; it is productivity.
Furthermore, it is worth introducing a practical consideration that often remains outside the debate. Labor-intensive sectors absorb a very significant part of available employment and tend to have a low level of productivity. To think that hundreds of thousands of workers can quickly move towards high value-added activities is an oversimplification. Sectoral mobility requires training, experience, business adaptation, investment, and time.
If a substantial part of tourism-related employment disappeared without real alternatives, the result would likely be a significant increase in unemployment. This would lead to a reduction in tax revenue, a decrease in social security contributions, and an increase in spending on public benefits and aid. From a strictly fiscal perspective, the cost to the public treasury could be higher than the expected benefits of an accelerated transformation.
This does not mean giving up on improving the production model. On the contrary. It means understanding that economic transformation is a gradual process that must combine more investment, more innovation, more training, and more productivity with the preservation of employment levels.
Finally, it is also important to remember that income distribution does not occur exclusively through the market, as it is corrected through the public sector. Progressive tax systems and the welfare state allow for the transfer of resources from higher incomes to groups with less economic capacity through healthcare, education, pensions, social benefits, and other public services. Therefore, people with lower incomes contribute less or even deduct, while those with high incomes contribute.
The real challenge consists of increasing the productivity of the entire economy, as it is this that determines the capacity to generate higher wages, greater well-being, and real convergence with the most advanced European countries. Europe's recent economic history shows that the countries that have prospered are not those that have pursued specific sectors, but those that have managed to create more added value per worker. This continues to be, today, the true basis of economic and social progress.
