Productivity in Catalonia: between short-term growth and structural challenges

The Catalan economy is experiencing a seemingly prosperous moment. With GDP growth of 3.6% in 2024, four times that of the eurozone, Catalonia is consolidating its position as Spain's growth engine. However, this temporary boom hides a more complex reality that deserves deep reflection: the structural problem of productivity, the cornerstone upon which any strategy for sustainable prosperity must be built. The paradox of growth without productivity is reflected in the most revealing fact of the current situation: despite vigorous economic growth, total factor productivity (TFP) in Catalonia contributed negatively (-0.2 points) to GDP growth in 2023. This means that growth is fundamentally based on the accumulation of productive factors—more workers, rather than better, more workers; its reflection in the evolution of per capita income. Spain, as a whole, has experienced a 7.3% drop in its TFP between 2000 and 2022, while in the United States it grew by 15.5%, Germany by 11.8%, and France by 12.7% over the same period.

Without productivity, economic growth is unsustainable because it depends solely on the increase in the factors of production, something that has obvious limits in an aging society like that of Catalonia and Spain. The international gap reveals a worrying diagnosis. The productivity data per hour worked are equally eloquent. Spain, far from narrowing the gap, has remained practically unchanged over the last two decades, evidencing a structural problem that transcends economic cycles.

One of the prominent roots of the problem lies in deindustrialization and specialization. An analysis of the structural causes reveals several interconnected factors. First, the deindustrialization process has been particularly intense in Catalonia. Between 1999 and 2019, the country lost 12,248 companies in the manufacturing sector (35.7% of the total) and 140,932 jobs (26.1%). This has weakened the entire productive system. Second, Spanish sectoral specialization continues to penalize productivity, with a low share of knowledge-intensive sectors that limits the possibilities of convergence with more advanced economies. Third, the smaller size of Spanish companies hinders productivity gains. While in Spain around 35% of employment is in companies with more than 50 employees, in Germany this proportion is 66%. Larger companies have a greater capacity to invest in R&D, digitalization, and training, key factors for productivity increases.

The reports by Enrico Letta and Mario Draghi offer a fundamental strategic framework for understanding the European and, by extension, Catalan challenges. The Draghi report identifies three key transformations: innovation, decarbonization, and economic security, noting that Europe must close the innovation gap with the United States and China, have a coherent competitive decarbonization plan, and increase security by reducing external dependencies. For Catalonia, it is worth highlighting that industrial policy is a strategic necessity and should be articulated through a broad agreement with economic and social stakeholders. The current economic sweet spot provides a certain comfort to undertake the necessary structural reforms that lead to improved productivity. However, this same temporary success can generate complacency and delay the necessary reforms.

Therefore, it is essential to develop an active political position that structures a plan to improve productivity, because it will be this long-term improvement that will guarantee not only better wages, but also that will provide solid foundations on which to build the welfare society. That's why an institutional framework for developing productivity-boosting policies is essential, and it must be done through an exercise of political responsibility, with the support of economic and social stakeholders, strengthening social dialogue and ways to increase our productivity and share it with everyone. This requires smart reindustrialization, digitalization, investment in R&D, strengthening human capital through training and attracting talent, and encouraging business growth.