How to grow the Catalan economy well
The Fènix Report has been a very healthy wake-up call about the seriousness of the Catalan economy's trajectory in recent years and in the last generation, with a GDP per capita that continues to move away from the European average (twenty percentage points in the last twenty years –from 114% to 94%).
The essential problem is the lack of productivity growth (that is, the product per employed person) for more than thirty years. Let's set the year 1992 as a date that everyone who has lived through it can remember and place. Productivity in Catalonia grew during the years when European prosperity reached Spain –from the Stabilization Plan to the early years of joining the EEC–. It has stagnated since. Until the seventies, there was growth in productivity and employment, and from 1975 to 1985, there was growth in productivity but at the cost of losing employment. The entry into the EEC seemed to correct this limitation, but since then (since 1984, to be precise) the modifications in labor legislation –to liberalize the rigidities of the Workers' Statute– have created a system where the labor legislation applied to those entering the labor market is much worse than that applied to those already in it, with permanent contracts. Little by little, many of the protections of permanent contracts have been eroded for new generations, reaching the situation in recent years, after the PP's labor reform, of a complete dismantling of all protections. We have had forty years of right-wing labor legislation, which has allowed the existence of very low wages, widely exploited in many sectors, precisely those that the Fènix Report points out as having the lowest average wages.
Some argue that there will always be wages that will not pay for the public benefits to which they are entitled. It should be remembered that the welfare state, to be viable and lasting, must cover the protection gaps of those who are temporarily unemployed, those who are no longer able to earn a living – due to health or age – and those who cannot yet earn one, but to do so it must count on the contribution of all who work. The wages that are socially admissible are those that cover the contribution to the common pot of the welfare state. The dynamic of welfare for all implies that all who can contribute. It is a self-destructive distortion that those who have jobs need the welfare state to survive. Such low-paying jobs should not exist. Therefore, I believe that after so many years of right-wing labor policies, we must think about left-wing labor policies. This can mean many different things. I emphasize one: higher remuneration, which is only achieved with higher minimum wages. By the way, with the territorial organization of the State, which is still pre-autonomic, we have this information by provinces, and with high statistical quality.
Productivity is product per employed. To improve the product, more capital is needed – more investment–. We have also had very low investment levels for many years. We have had very low investment since the Great Recession (in our country, 2008-2014). The housing problem stems from this, let's not forget. The large investment in housing made during the boom years of the euro, when Spanish public and private debt had no risk premiums, proved partially useless. Construction was carried out in poorly located areas, expecting expansion to be infinite. We are still paying for it. We need investment in well-located housing, we need investment in transport that allows population mobility, and we need a lot of investment in equipment for all productive sectors and activities. This implies having policies to attract capital and encourage its investment. This means, simply put, more right-wing policies for capital. Not for the big capitalists, who are already very well treated – perhaps too much –, but for medium-sized and even small capitals (like homeowners). That is, fiscal incentives (currently in Catalonia there are only fiscal penalties) and an attitude from the administration that facilitates investment.
What I say is more or less the opposite of what we have done for most of the last forty years, that is, right-wing policies for labor and left-wing policies for capital. Let's think about it. A great agreement is needed to achieve this result, which should please capitalists and workers, although it may not please employers' associations or unions. Public administrations might not like it, as they would have fewer resources, but citizens would like it, as they would become more self-sufficient and not so dependent on subsidies.