José Ignacio Conde-Ruiz is a professor at the Complutense University in Madrid and a researcher at the corporate research institute FEDEA.
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(Photo: ESADE)
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In the past decade, Spain has been hit by two of the worst economic crises in history. The effects were stronger than in the rest of Europe. The financial crisis hit us more because we had a significantly oversized construction sector.
The health crisis affects us more, because the tourism industry, which suffers the most from restricted mobility, is much more developed here than the European average. After the first crisis, a change in the growth model was necessary, in which the added value of the construction sector had to be reduced by more than five percentage points of the gross domestic product. On the other hand, apart from improvements in productivity, in this crisis there will be no need to change the model if we return to normal.
On the contrary, an efficient tourism industry can be a strength to face the challenges of the digital revolution and its consequences for the polarization of employment. All of the analyzes suggest that workers who perform routine tasks are most easily replaced by technology.
Therefore a large part of employment in industry and part of employment in the service sector will be reduced. On the other hand, workers doing jobs that are complementary to technology or workers doing jobs that are difficult to replace with technology are less at risk. Therefore, a tourism-related service economy such as Spain, which has a high proportion of hard-to-replace labor, can be a strength.
After overcoming Covid-19, the challenge for Spain is to strengthen the generational pact. Reforms and aid must be launched to prevent the scars that the crises have left on the younger generation from becoming irreversible.
Many reforms are needed
On the one hand, the labor reform of 2012 must be deepened in order to reduce the precarious working conditions that affect young people in particular and which prevent young people from building an independent life. It is no coincidence that Spain has one of the most precarious labor markets in Europe, one of the lowest birthrates and that young people lead independent lives much later.
On the other hand, it will be necessary to reform the pension system in order to avoid that future generations are left with the consequences of an annual structural deficit of three to five percent of gross domestic product.
We have an unresolved budget crisis that began after the financial crisis and the measures taken to deal with Covid-19 will cause the national debt to rise to over 120 percent of gross domestic product. That makes higher tax revenues necessary if we do not want to leave the national debt to future generations.
More: Economists expect an economic upswing in the new year.
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