Spain has once again excelled in overcoming the obstacles it faced last year. Despite global slowdown, interest rate hikes, and price crises, family incomes increased. In 2023, Spain was the second country in the Organization for Economic Cooperation and Development (OECD) where household real income per capita grew the most, second only to Hungary. This growth exceeded levels seen during the real estate bubble for the first time.
The positive impact of strong job creation, wage increases, public assistance, and moderation in price increases during the past year is evident from the data published by the OECD. Household real income grew by a robust 5.16% in 2023, recovering significantly from the previous year’s decline of 2.88% due to the war in Ukraine and uncontrollable inflation. This increase has allowed Spanish family incomes to stop being stagnant after almost two decades. The slight difference compared to 2017 indicates economic strength and productivity growth.
In an international comparison, Spain’s performance stands out. While household real income in the OECD increased by 1.2% in 2023, Spanish families experienced a fourfold growth. In comparison to other European countries like Germany, Italy, and France where income either fell or barely improved, Spain’s growth is remarkable. Overall, the increase across OECD member countries was enough to recover from the setbacks of 2022 due to the withdrawal of COVID-19 public support.
The final quarter of 2023 saw a significant boost in household incomes in Spain according to the OECD. In that period, income increased by 3.7%, with a previous 2% decline in the third quarter. The acceleration of GDP growth from October to December played a vital role in this increase. Despite the positive results, there is still a long way to go for Spanish household incomes to reach the growth level of other OECD countries. Productivity remains a key issue, with Spain lagging behind in comparison to other European economies and OECD countries.
The gap in income growth between Spain and other OECD countries can be attributed to lower productivity levels. Although there have been improvements, Spain’s productivity rate remains below that of other European economies and OECD members. This issue is prevalent across all sectors and not specific to a particular industry. However, factors that have positively impacted Spain include wage increases beyond agreed upon levels, an increase in the minimum wage, social benefits, anti-crisis aid, and pension reevaluation. Despite challenges, Spain’s economy has shown resilience and growth in household incomes in 2023.
