Before the pandemic broke, Banco de España estimates had placed the Spanish economy’s growth potential slightly above 1% per annum. It is too soon to accurately assess the scale of the damage the current crisis will cause to this potential growth. But, unquestionably, the impact will be negative and, therefore, our growth capacity looking ahead might be lower than that estimated before the crisis. The main factor behind the Spanish economy’s modest potential growth is, undoubtedly, the low structural growth of total factor productivity. These differences should not be underestimated, since productivity gains are a fundamental ingredient for achieving a 9  sustainable increase in a country’s economic well-being. Indeed, the greater these gains are, the greater the possibilities of raising wage levels and the quality of the jobs created, along with increasing the resources for funding public policies. It is thus necessary to address the various structural aspects which, across the board, restrict productivity gains. In this connection, we must improve the quantity and quality of public and private investment in human and technological capital, revise our educational model and promote business growth and dynamism. Elsewhere, labour market duality, a very high structural unemployment rate and high longterm unemployment not only restrict our growth capacity but also contribute to increasing inequality. In fact, since 1980 the unemployment rate in Spain has averaged almost 17%, a figure far higher than that observed in other European countries.

The situation will worsen with the current crisis, whereby it is vital to strengthen the role of policies aimed at increasing the employability of the more vulnerable workers and preventing unemployment from becoming structural. It is worth noting here that the sectors potentially most affected by this crisis (among which transport, hospitality, leisure and retail) account for almost 20% of employment in our country. But, moreover, these sectors evidence a greater concentration of less skilled workers who are less exposed to IT-, numeracy- and literacy-related tasks. That hampers the employability of these workers in other productive sectors that foreseeably have better growth prospects in the near future. Improving active labour market policies is also necessary over the medium-term horizon. Undoubtedly, technological advances (artificial intelligence, automation and robotics) will create new opportunities and will contribute to much-needed gains in productivity. But some workers will lose their jobs in this transition and will not always be in a position to instantly take advantage of new opportunities. Accordingly, active labour 10  market and training policies, duly re-designed to boost their effectiveness and efficiency, and with the appropriate funds behind them, are a natural lever for ensuring lifelong-learning for workers. This will enable them to acquire new skills, to hone them and to recycle themselves professionally in a changing and foreseeably very demanding environment in terms of technological skills. In sum, these and other reforms should contribute to increasing the economy’s growth potential.