Spain's Economic Growth Masks Persistent Productivity Problems and Living Cost Pressures in 2025
Spain's 2025 economic growth belies persistent low productivity and rising living costs that continue to burden ordinary citizens.
- • Spain's productivity remains among the lowest in the EU, averaging €58,000 per worker from 2019 to 2024 with only 1.9% growth over seven years.
- • Despite a 2.9% GDP growth in 2025, many Spaniards face financial strain due to stagnant wages and rising living costs.
- • Housing prices and basic necessities like food and energy have increased sharply, intensifying household budget pressures.
- • Experts warn current growth relies on population increase and low-productivity jobs, resulting in unsustainable and superficial macroeconomic expansion.
Key details
Despite Spain's economy growing at an expected rate of 2.9% in 2025, underlying structural challenges in productivity and wage stagnation have worsened the financial strain on many Spaniards, highlighting a disconnect between macroeconomic success and citizens' living conditions.
Recent data from Eurostat and analysis by Spain's Institute of Economic Studies (IEE) reveal that Spain's economic productivity remains among the lowest in the European Union, averaging around €58,000 per worker from 2019 to 2024. Productivity growth has been stagnant at approximately 1.9% over seven years, with minimal gains per hour worked, reflecting a failure by companies to significantly boost efficiency or invest in innovation. Experts warn this stagnation means economic expansion relies heavily on population growth and the creation of low-value jobs, rather than improving real income or competitiveness.
Compounding these structural issues, wages have not kept pace with rising living costs. The National Collective Agreements have increased average salaries by roughly 3.5%, but many workers outside these agreements see no such gains. The minimum wage has risen to €1,184 monthly, yet this remains insufficient, particularly in Spain's large cities. Median annual salaries hover between €23,000 and €26,000, falling short of covering housing, food, and energy expenses that continue to surge.
Housing prices in Spain reached record highs in 2025, with average costs of €2,093 per square meter to buy and rentals exceeding €14 per square meter, placing further pressure on household budgets. Concurrently, food prices and energy costs have risen, disproportionately affecting low-income and younger populations. According to a NielsenIQ report, hourly wage increases of 2.3% lag behind a 2.8% rise in consumer prices, eroding purchasing power for many.
Economists like José María Rotellar caution that Spain’s growth is “extensive rather than intensive,” sustained by public spending and employment growth in low-productivity sectors rather than genuine productivity improvements. This pattern is unsustainable and reminiscent of pre-2008 crisis years, risking further erosion of living standards despite nominal GDP gains.
ERC spokesperson Gabriel Rufián summarized the sentiment, questioning the value of economic growth that does not translate into better wages and living conditions for citizens. As Spain closes 2025, the paradox remains vivid: macroeconomic indicators show stability and expansion, yet a significant portion of the population struggles to afford basic necessities amid stagnant real income growth and soaring living costs.
This article was synthesized and translated from native language sources to provide English-speaking readers with local perspectives.
