Spain loses industrial muscle due to the inflationary wave

The voices that have been demanding a state pact for the industry for decades were heard louder last year. With the services sector devastated by the coronavirus pandemic, a huge number of economists and politicians claimed the need to reindustrialize Spain to depend less on tourism. A longing expired just a year and a half later. While services again pull the economy, the industry is drowning in a sea of ​​costs and labor unrest.

The image of the sector in recent days has been marked by protests. Protests of the metal workers of Cádiz, who have staged a strike of more than ten days in a row to maintain their labor rights. After days

of anguish, the mobilizations have been closed this week with an agreement that will guarantee wage increases of more than 2% for the next few years.

But the wound has not completely closed. Companies and workers fear that new conflicts will break out in the coming weeks.
«What we have experienced in Cádiz in recent days
it should be taken as a wake-up call. It is necessary to improve the conditions of certain jobs, because if not the mobilizations could be extended to other territories, “explains the president of the General Council of Industrial Technical Engineering of Spain (Cogiti), José Antonio Galdón.

The truth is that the industry, designated a year ago as an economic lifeline, is experiencing its particular perfect storm today. Not only because of social conflict. Although at first the shortage was focused on the lack of microchips, the
it already severely affects almost the entire sector. And to this is added the fact that energy costs continue to rise, which has already caused production stoppages in certain factories. As if all this were not enough, the runrun of strikes is spreading among workers, who want to avoid purchasing power with the new inflationary wave.

Funcas economist María Jesús Fernández rejects Cogiti’s thesis and warns of the “danger” of spreading wage increases. “Before the 2008 crisis, inflation allowed companies to improve their margins. But not now. Now there are no winners with this price hike, motivated by our dependence on imports. That’s why you have to be careful when checking wages, “he says.


Costs are skyrocketing in the industry. The industrial price index (IPRI) rose 31.9% in October, an unprecedented percentage in the last 45 years, according to data published by the INE. With this rise, the IPRI has already seen ten consecutive months of year-on-year increases. Industry sources warn that this situation may lead to new factory shutdowns and, by extension, the economy. In addition, they recognize that, as is the case in the construction sector, there are certain contracts that are being deserted due to the costs that certain companies have to bear today. The same high-value-added companies that were called a few months ago to lead the recovery. “Costs are already at significant levels, which can affect business», Stand out from Funcas.

The unions, for their part, fear that this breeding ground will cause a new wave of relocations. “Spain must regain its industrial sovereignty, because otherwise it will be impossible for the sector to gain weight in GDP in the future”, highlights the secretary of industrial policy of UGT-FICA, Juan Antonio Vázquez. The trade unionist recognizes that the sector is in a process of change and transformation, but also warns that this process “will have to count yes or yes with the workers.”

Despite the wishes of reindustrialize Spain of academics and economists, the reality is that the industry has been gradually losing weight in recent years in the national GDP. According to Cogiti data, in the 70s the sector represented 34% of the economy; in the 90s, 25%; in 2000, 18.7% and in 2019, 14.64%.

Funds that do not arrive

European funds represented a good opportunity to reverse this trend after the pandemic. Pedro Sánchez announced, without going any further, that among the first Strategic Projects for Recovery and Economic Transformation (Perte) would be an investment of 4,300 million euros until 2023 to promote the electric and connected vehicle. The rain of millions, however, is far from seeping into the industrial sector.

«I think we have made ourselves very high expectations with European funds that are going to be difficult to meet, ”explains María Jesús Fernández. «There is a lot of uncertainty. The ones that most need this type of project are SMEs, which also account for 90% of the sector, but in practice they are the ones that have the most difficulty in reaching the aid due to the bureaucracy they have to go through, “adds Galdón. There are also criticisms from the large company: this same week an internal Airbus document was leaked in which the Government’s system for distributing these funds was questioned.

Vázquez, who is also a delegate of the works council of the
aeronautical manufacturer
However, he recalls that the company “has received billions from the EU” to end up “relocating part of its production” outside of Spain. That is why the UGT considers it essential that European funds be granted only to companies that commit to investing in our country, “to regain a strong sector.” “It is not about reindustrializing more, but about doing it better,” concludes the UGT delegate.


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