Spain | Manufacturing jobs won't come back

Europe and the U.S. are considering how to increase the weight of manufacturing in the production structure. Since the beginning of the pandemic, fiscal plans and tariff policies have been announced to boost or protect certain sectors.

Key points

• Key points:
• If the objective is to accelerate job creation, this strategy may not yield the desired results.
• For example, productivity in Spain is more than 50% higher in manufacturing than in services (measured in GVA per hour worked). With everything else constant, the transfer of jobs from one sector to another would entail a considerable reduction in efficiency in a substantial part of the industry.
• Given the lack of private and public investment, governments have recently tried to boost industrial production in certain sectors by protecting companies with tariffs that allow them to compete.
• Imposing tariffs could lead to a trade war. First, the cost of living will deteriorate. In recent years, we have seen households discontent in the face of inflation increases. Second, the increase in tariffs will probably not be enough to eliminate a large part of the differences in competitiveness between countries.
• Structural change in the automotive sector is also playing a negative role. A growing number of the cars being sold in Spain are coming from China. Our country has specialized in manufacturing cars with internal combustion engines.

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