Spain | Un(productivity): the Spanish disease

Labor productivity in Spain is counter-cyclical, unlike in the majority of developed economies. This phenomenon is mainly due to the poor functioning of the labor market. There is an urgent need to adopt reforms to boost sustained productivity growth

Key points

• Key points:
• A feature that differentiates Spain from the majority of developed economies is the countercyclical nature of labor productivity
• The evolution of production efficiency within each industry explains around 90% of the dynamics of labor productivity in Spain. The role played by changes in the composition of employment between industries is small
• The countercyclical nature of aggregate labor productivity is driven by construction, real estate and retail trade
• The unusual behaviour of labor productivity in Spain is mainly due to the poor functioning of labor market institutions
• There is an urgent need to adopt reforms to boost sustained productivity growth

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