Spanish Bank BBVA has warned that unemployment in the country could take as much as 10 years to get back to where it was before the financial meltdown, even if it could recover at the rate of 2% a year.
Its report claims the economy is bogged down by low wages, low skills and a lack of investment in research.
Workers earn 20-40% less than those in other leading European states and that gap is due in part to very high unemployment which "derives from a labour market that functions substantially worse than in other countries".
The country’s spending on research and development is 70% below the EU average. The bank also said there much modern technology is missing from the work place.
The report urged Spain's traditionally small- and medium-sized firms to enlarge and seek international markets. "Large companies are more productive, have more human capital, survive longer, invest more in R&D and export more," it said, adding that such growth would occur only if legal, financial and fiscal obstacles were removed.
It said that for each percentage point fall in unemployment there was a 0.6% rise in GDP, so reducing unemployment also cuts public debt, which has hit an all-time high of €988 billion.
