A harsh report on the Catalan economy attacks "subsidized" business sectors that pay low wages

BarcelonaA harsh report on the state of the Catalan economy, prepared by several economists, criticizes the country's productive structure because several business sectors end up being, in effect, "subsidized" by the rest of the economic fabric. These productive sectors —among which the report particularly highlights tourism, services such as delivery platforms, or the meat industry— have low productivity levels and, by extension, offer such low wages that workers, throughout their professional lives, will not pay enough taxes to cover the public services they consume.

"In recent decades, it has been celebrated that the Catalan economy has been growing faster than those in its surroundings," points out the Fènix Report —presented this Friday in Barcelona—, which nevertheless highlights that these good figures are due especially to "extremely rapid population growth" and not to an improvement in the productivity of Catalan companies. This has led to an increase in gross domestic product (GDP, the indicator that measures the economic activity of a territory), but GDP per inhabitant (which measures the growth of productivity and the general wealth of the population) has stagnated or fallen.

AThis fact becomes clear, according to the study, when observing the European context: "The productivity of the Catalan economy is clearly lower than that of each and every one of the European economies —national or regional— with which it makes sense to compare itself," it states.

Productivity, in fact, is one of the main elements to consider. This economic indicator measures the efficiency of a company or an economy: how much labor (workforce) and how much capital (machinery, offices, factories, vehicles, tools, etc.) are needed to produce goods or services. The more it produces with less capital and labor, the more productive a company or territory will be. At the same time, it is an indicator that is closely linked to a country's prosperity: the richest countries with the highest levels of social welfare are also among the most productive in the world.

From the beginning of the 21st century, Catalonia broke a historical trend of converging towards GDP per capita levels comparable to those in Europe. In 2000, GDP per Catalan was 8% lower than the European average, but by 2025 it was 13% below. This inability to catch up with the rest of the continent is due to the fact that, in the last quarter of a century, "in some cases Catalonia has experienced a process of relative specialization towards low-productivity sectors," according to the text.

"Subsidized" sectors

The report does not indicate, however, that this loss has been caused —as has happened in other parts of Europe— by a deindustrialization of the country: "Catalonia has not suffered a relative process of deindustrialization," it says. What has occurred, then, is a strong creation of jobs with a "binary character." On the one hand, a lot of new employment has been concentrated in "high productivity sectors," such as the chemical and pharmaceutical industries, telecommunications, scientific research, or professional services (for example, consultancies, engineering firms), and, at the same time, "in low productivity sectors," such as the "food products industry, auxiliary services, and hospitality."

These latter sectors are what the report defines as "subsidized productive sectors"; that is, those in which "the average wage is so low that the worker does not generate, throughout their life, enough fiscal and social resources to finance the most basic public services they enjoy." "The customer of these sectors thus benefits from a hidden subsidy from the rest of society," adds the study, which places the limit salary for entering "subsidized" sectors at around 29,000 gross euros.

Among the report's authors are several authors of the report, most of them linked to Pompeu Fabra University (UPF). The three main authors are Xavier Cuadras, a professor at UPF and former director of Idescat (the statistical agency of the Generalitat); and two former professors from the same university who have also held positions in both the Generalitat and private companies: Modest Guinjoan and Miquel Puig, under the coordination of executive and engineer Xavier Roig. In addition, UPF economics professors Jordi Galí, Guillem López Casasnovas, and Jaume Ventura have acted as advisors.