The regulator estimates that the recovery plan will improve annual GDP by up to 1.75%, but fears labor market rigidities will reduce this impact by 25%
The unique opportunity offered by European funds to facilitate the structural transformation of the Spanish economy has met a last-minute enemy: the labor shortages affecting certain sectors of the Spanish economy. This is what the Bank of Spain states in an article published this Monday under the title ‘The Recovery, Transformation and Resilience Plan and the Macroeconomic Impact from a Sectoral Perspective’.
The regulator estimates that the recovery plan, which will bring Spain about EUR 69,500 million, will have a direct impact on the level of GDP of 1.15% on an annual average over a five-year period, which could even rise to 1.75% . % pa if “trailing effects” between sectors are taken into account. However, this maximum will only be reached if the full execution of these funds is achieved, he specifies. However, this forecast is less optimistic than that of the Executive, which averages 2.6% over ten years
And to achieve this, Spain has two factors that can negatively influence and “significantly reduce” its effects, according to the entity headed by Pablo Hernández de Cos: the rigidity of the Spanish labor market, once the entry into force of the Labor reforms, the flexibility of companies to hire staff and the lack of highly qualified workers reduced. To the point that they can limit the macroeconomic impact of the investments considered in the recovery plan and reduce the estimated impact by about 25%, from an average of 1.75% to 1.3% of GDP per year, the report said.
“The shortage of highly skilled workers could limit the positive effects of the recovery plan, by hindering the expansion of the sectors most closely linked to information technology, particularly benefiting from these funds and intensively engaged in the employment of highly skilled workers,” explains the Bank of Spain, which also lists education as one of the most affected activities.
The report indicates that the effects that the European funds will have are “heterogeneous” depending on the industries, but considers that the sectors that will benefit most are those related to the digitization process (information and communication or professional and technical services ), as well as the construction sector, thanks to investments in infrastructure related to the ecological transition process, the very two sectors most affected by the labor shortage.
Source: La Verdad
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
