Also, it should be sought to enhance work-life balance, to promote the birth rate and to tailor migratory flows to the demand for specific professionals and job profiles. Finally, as I said regarding the minimum wage, the measures aimed at protecting the lowest incomes should be designed in such a way as not to diminish employability. Meanwhile, the factor productivity growth rate of the Spanish economy continues to be low (see Chart 15). The modest growth of productivity has been associated with a lower rate of growth of firms’ average productivity in Spain than in other European countries, and with an allocation of resources to less productive firms during the past expansion. Addressing these problems requires an improved business competition framework. Regarding this last matter, over the last decade much of the loss in competitiveness – measured in terms of relative unit labour cost indicators – accumulated during the expansionary phase relative to the euro area as a whole (see Chart 16) has been recovered. This improvement is mainly explained by the improved labour productivity associated with severe job destruction during the crisis and by wage moderation, while the correction associated with profit margins has been less important. This fact, which at first may have been associated with the need for firms to improve their financial position, may now be evidencing a certain lack of business competition in some sectors, the persistence of which may hinder the proper allocation of resources, incentives and innovative capacity and, in general, the well-being of consumers.

It is likewise important to recall that the impact of population ageing is not confined to public finances, since it also bears down on the participation rate, productivity and the economy’s potential growth; hence, tackling this phenomenon calls for a broad-brush approach, regarding both the time period envisaged and the set of instruments that should be used. In this respect, the outlook for the Spanish economy’s long-term potential growth is relatively modest (see Chart 13). Specifically, on the latest available estimates, which are naturally subject to some degree of uncertainty, our economy’s potential growth rate is expected to fall from close to 3% per annum in 2008 to post-crisis levels slightly below 1.5%. This level, though close to that of the euro area, is below that estimated for the most dynamic developed economies. Among the key structural factors constraining this growth are the aforementioned population ageing, high structural unemployment and lacklustre productivity. Indeed, despite the swift pace of job creation in recent years, unemployment remains very high, especially among certain groups, such as the lesser-skilled, whose unemployment rate is over 25% (see Chart 14). The difficulties some groups face in finding work means that, according to figures for the third quarter of 2018, practically half the unemployed have been in this situation for over a year. Of particular importance here is improving the quality of employment, which is affected by the high involuntary part-time status and short duration of employment contracts. Such marked segmentation of the labour market hampers, moreover, productivity gains.