The Organization for Economic Co-operation and Development (OECD) has added thousands upon thousands of years to the string of praise that the Spanish economy has been receiving for months. “It has behaved in a very impressive way, registering GDP growth that exceeds that of other European countries and the majority of economic forecasts,” he notes in his report on Spain. However, the document seeks to be a guide to action for the future that diagnoses the current moment. There, many of your petitions conflict with government policies, especially regarding pensions and taxes.
First, the organization warns that despite recent reforms, such as increasing the statutory retirement age, extending the contribution period, an intergenerational equity mechanism, and reforming the special regime for independent workers, the gap between spending and pension income is expected to widen in the coming decades. Therefore, it is necessary to take additional measures. Among them, he cites the establishment of an adjustment to life expectancy, the extension of the reference period for calculating retirement rights or similar mechanisms. “For the economy to follow a steady decline path, it is necessary to address the increase in pension spending, reduce inefficient spending and improve fiscal austerity,” he recommends.
However, he refuses to place the tax burden on work, warning that new increases in social security contributions “could hurt employment.” According to the OECD, the ratio of taxes to GDP paid in Spain in 2023 was 37.3%, which is higher than the average of 33.9% among countries belonging to the richest economies on the planet. However, its consumption revenues are lower than its EU and OECD counterparts, which is why it is necessary to implement comprehensive tax reform to rebalance payments and increase incomes. He added, “The options include unifying the types of value-added tax, reducing exemptions, equalizing special taxes on diesel and gasoline, enhancing taxes on energy and vehicles, in addition to reducing tax revenues for low-income families.”
The Demographics Bill covers 132 pages of text, with the OECD using Airef calculations that suggest pension spending will increase by 3.2 points of GDP between 2023 and 2050, and age-related spending will increase by 5.2 points. He warns: “Spending on pensions will increase, creating a growing volume of implicit liabilities that are not currently allocated. The linking of pensions to inflation and the lack of automatic adjustment for increases in life expectancy increases the costs of the system.”
Before that, it calls for encouraging city workers to stay in their jobs and expanding adult education. “The employment rate of key workers has increased in recent decades, but remains low,” he explains. “The employment rate is below OECD levels and declines significantly after 55 years due to early retirement, obsolete skills, and limited labor adaptability.”
It also aims to improve the integration of immigrants into the labor market. If there is no change in trends, the arrival of foreigners will boost the Spanish population by more than 50 million in the second half of 2026. There is a margin of improvement in areas such as simplification of pre-arrival work visas, bilateral labor agreements, recognition of titles or increasing the number of staff to manage arrivals. Steps that “could attract more qualified immigrants and help alleviate labor shortages.”
The entity acknowledges that Spain’s public finances have improved, with the amount accumulating declines since 2021, standing at 101.8% as of 2024. However, this level remains high, and the OECD estimates that there is increasing pressure to spend more over a long period on games such as defence, climate change and the aforementioned ageing, where it is now necessary to have more fiscal space. “To confront these pressures without compromising growth, it is necessary to maintain a credible fiscal policy over the medium term, while simultaneously creating a growth-enhancing spending margin, alongside policies that encourage potential growth.”
The moment of good fortune for the Spanish economy, which is growing at a rate of about 3%, constitutes a good opportunity for the OECD to replenish its financial resources and allocate its rosters to confront the coming turmoil. “Given the strong growth momentum, accelerating the pace of deficit reduction would allow Spain to rebuild its fiscal cushions more quickly to respond effectively to future crises or recessions,” he insists.
More construction
More than all public accounts, the report addresses issues such as the banking situation, which is “well capitalized and profitable despite tightening financial conditions.” The most politically interesting agenda, the home. At this point, he calls for increasing the supply of affordable housing, accelerating urban development measures and, ultimately, increasing investment in social housing.
Furthermore, it addresses structural issues related to the Spanish production sector, such as the status of the BIMs, which represent 99% of companies and employ the majority of the workforce, especially in the service sector. The OECD laments that they tend to be “significantly less productive than large companies.” This is the fault of their limited access to external financing and qualified labour, their organizational complexity, and their low dependence on advanced digital technologies. “Two small businesses report difficulties recruiting workers with sufficient skills, although many lack the resources to develop and implement training strategies,” the report notes.