The arrival of more tourists reduces employment and wages in the industry
The increase in tourism activity creates jobs, but destroys them in more productive sectors, according to a study by economists from UPF and UB.
BarcelonaMore tourism, fewer jobs in manufacturing. This is, in essence, the conclusion of a new study analyzing the impact of the increase in foreign visitor flows on the labor market in Spain. It shows how the arrival of more tourists leads to an increase in hiring in this sector and in related services, but at the same time destroys others, especially in manufacturing, where wages have also fallen.
The article, by economists Libertad González of Pompeu Fabra University and Tanya Surovtseva of the University of Barcelona, is titled Do More Tourists Promote Local Employment? (Do more tourists promote local employment?). "We found that there were more increases than normal related to tourism and related services, but, overall, the change in employment was absolutely zero," González explains to ARA, regarding the analysis of the increases in foreign tourism. In other words, the occasional influx of visitors causes a "shift in employment toward tourism," but with a suction effect on the rest of the economy.
González points to two possible reasons that explain these changes. One is that workers who make the leap from industry to tourism companies did so because they were "leaving part-time jobs." The newly created tourism jobs are also, for the most part, part-time, but the fact that there are peaks in the concentration of tourists at specific times of the year means that workers can "work more hours" and, therefore, earn more money during the tourist season.
Aside from this, the UPF professor also points to business-related reasons: the growth in visitor numbers makes the tourism sector more attractive to some companies in the short term, which could lead to some new investments being channeled toward this sector and others being diverted. These investments boost employment in tourism and remain in industry and other services, where wages also fall.
The fact that the manufacturing industry is one of the sectors most affected by the rise in tourism activity is partly related to the profile of workers, as both employ low-skilled labor. However, this negative impact on industry, in favor of tourism, is what "worries" the two researchers, especially in the long term, because industry generally has higher productivity than tourism, González points out.
In this sense, tourism "is considered a sector with rather low productivity," says González, who also points out that the fact that tourism accumulates more employment means that "employment is being wasted" in a sector with lower added value "at the expense of other sectors" that would contribute greater wealth to the country as a whole.
In this sense, the study adds new evidence to the need for a change in the productive model both in Catalonia and in the entire State, defended by economists and economic agents, from employers' associations and unions such as the chambers of commerce. Since the end of the pandemic, experts and entities have emphasized the public debate on the need to reduce the weight of tourism in the economy and promote sectors with higher productivity, such as professional services – telecommunications, finance, consulting, etc. –, technology, research and industry.
The main argument is that these types of sectors are the most important in the world's most advanced economies, which means that, thanks to the high productivity of companies, workers can earn higher salaries, companies have more profits, and public administrations collect more taxes to better finance public services.
New method
Beyond the purely empirical findings on the impact of tourism on employment in Spain, the article provides a new methodology for detecting this impact. The paper analyzes the evolution of employment in the tourism sector and in the labor market as a whole in different provinces, since not all tourist destinations in the country have the same level of tourism or receive visitors from the same origin.
To isolate the direct effect, both researchers analyze specific shocks in other destinations (for example, terrorist attacks or political instability) that cause tourist flows to Spain. For example, German tourists choose Turkey as their main holiday destination, so a shock in this country that makes tourism more attractive will increase tourism in areas of Spain that receive more German visitors, such as Mallorca, but will not be as noticeable in other areas where German tourism is less prevalent.
This allows for the direct impact of growth in tourism flows to be identified and for the isolation of increases in employment caused by internal factors, such as legislative changes, tax reforms, or subsidies to the sector, which do not allow for the discernment of the effects on the labor market of the arrival of more visitors.