Opinion

A simple glance at the Catalan economy in recent years: this year, 2008, we will see the 15th financial year of uninterrupted economic growth, with American-style growth rates, close to 3% for the 1994-2008 period; with the creation of around one million jobs (currently 3.5 million); and with relatively contained inflation for the overall period, we could say that the Catalan economy has gone very well and that it will continue to do so. There are numerous reasons for this, but many of them are exceptional: effects of the latest competitive devaluations; entry and expansive monetary policy of the euro zone; construction boom; salary and income differences; migration flows, etc. I will not expand on this. Despite this, various voices of authority have started being raised, not enough in my opinion, saying that the growth and competitiveness model of the Catalan economy, which has produced such good results over the last two decades, is becoming exhausted and that, in addition, this exhaustion is speeding up with every passing day.

An explanation, rarely considered, for this change of cycle is the clear failure to adapt of the sources of growth and competitiveness of a large part of our productive fabric to the new reality created by the process of construction of a knowledge economy and society, which has its pillars of foundation in the globalisation process, digital revolution and the new patterns of family and company demands. In companies, this new panorama involves the appearance of a new strategic, organisational and production model, which we have agreed to call the network company. This new way of creating a company bases its operation on the establishment of business networks (internal and external) and involves a thorough transformation of the productive operation towards a variant configuration system of cooperation and competition, where the market is global (with no space and time limits), where work and production are arranged into a network (more autonomy and decentralisation of decision-making) and where the integrated value chain is diluted. There are three considerations regarding this. One, the network company needs a powerful technological instrument. Information and communication technologies (ICTs) are the basis of the network company infrastructure. Two, analysis of the network company cannot be isolated from its driving force: the economic globalisation process, which imposes new competitive requirements, based on innovation and flexibility, to achieve increases in productivity and competitiveness. And three, the process of consolidation of the network company is not independent from the existing business structure. The clearly distinctive features of Catalan companies condition to a great extent the process of consolidation of a new way of doing business that adapts to the requirements of the globalised environment based on knowledge.

In order to explain the positioning of the Catalan economy with regard to the challenges posed by the new economic situation, we at the Universitat Oberta de Catalunya have carried out research, the PIC_ Companies: The network company in Catalonia. ICT, productivity, competitiveness, salaries and yield in Catalan companies (www.uoc.edu/in3/pic/eng) research project. We have reached two very relevant conclusions that reflect the structural problems presented today by the Catalan economy.

One. At the dawn of the twenty-first century, Catalan companies are small, family-run, flexible, with a level of training that clearly needs improving, dual employment relations and with low-level international competitiveness.

Even though, as is shown in international literature, size (88% of Catalan companies have fewer than five employees and contribute 59% of the private GAV) in itself does not constitute a barrier to competing in the new innovative and globalised environment, among other reasons because small companies are more flexible and deeper-rooted in the territory, we have detected three elements that do drag down the productive potential of the Catalan economy. Firstly, the productive fabric of Catalonia is characterised by business activity that is still highly centred on itself and not all that open to the outside world. From the data obtained, only one in three companies export and in addition, only 7.8% of Catalan companies sell over a third of their production outside Spain. Secondly, the average level of training in Catalan companies is, frankly, in need of improving. Management work has a level of mainly university studies (around 53%). Despite this, the average level of training among employees is secondary school studies (with around 53.7% of cases), followed, practically in equal parts by university levels of training (21.5%) and primary education or no studies (22.4%). In addition, analysis of training determinants in companies shows us that investment in human capital is made in employees, especially managers, who have already received training. Therefore, the extension of training continues to expand the difference, the gap, between trained and untrained employees. And, thirdly, Catalan companies are digitally well equipped, even though the degree of penetration of the uses of ICTs is low. Despite around 91% of Catalan companies having an internet connection, some 87.4% having e-mail and 46.1% having a web page, only 21.7% buy over the internet and 11% sell by e-mail. In addition to this, the construction of an indicator of ICT uses, built on the basis of the use of these technologies in the main value elements of business activity, demonstrates that 71.1% of Catalan companies make a very primary use of ICTs, especially in administration and accounting tasks.

Two. Only a fifth of the Catalan productive fabric has a competitive and efficiency model adapted to the requirements of global competition.

We have conducted research into the determinants of productivity and competitiveness of Catalan companies. There are two considerations with regard to productivity. The first, relating to its facts, is that we have observed a deceleration of the growth in work productivity of Catalan companies (from 4.6% in nominal terms during 1995-1996 to 3.7% in 2000-2004). This deceleration contains implicit a lot of bad news and some good news. The bad news is linked to an extensive growth pattern, based on increased work, often badly qualified, and on a very weak extension of improvements to efficiency resulting from the use of ICTs, and of the co-innovation processes that link them to the overall productive fabric. The good news is that in a small number of companies, those that make advanced use of ICTs, it explains the slight improvements to efficiency of the private economy in Catalonia. The second point, which relates to their sources, is that relations of a complementary nature among ICTs, organisational changes and qualification of the work, in a context of employment stability, of flexible working days and innovative organisational culture, only explain the growth potential of around 20% of Catalan companies, curiously the ones that make very intensive use of technology and knowledge. In terms of competitiveness, we have observed that, given the preponderance of a very primary competitive model, based on investment in physical capital and the presence of establishments in international markets, a more effective and advanced competitive, but minority, pattern is observed, namely that of companies which make intensive use of ICTs, based on the combination of investment in physical capital and intangible capital (intangible and human), the productive experience of the company and its presence in international markets.

In fact, and to sum up, we can conclude by stating that in the search for a positive impact by ICTs on the business activity and business results in Catalonia, we have had to capture other non-technological dimensions of the co-innovation processes, in particular the intensity of use of technology and knowledge, organisational changes and the qualification of human resources to secure material improvements, for both the company (productivity, competitiveness, yield) and for employees (salaries). This is the case because the Catalan productive structure is now a dual one. In the great majority of Catalan companies (around four-fifths), the weak presence of: a) advanced uses of ICTs and information and knowledge flows; b) the internationalisation and different adaptation of the activity to the globalisation process; c) the new ways of organising production, work and employment relations, based on functional autonomy and on organisational decentralisation; d) investment in intangibles; e) financing, formal structures and networks of cooperation in innovation; f) the continued expansion of employees’ skills and the enrichment of places of work end up severely weakening the production and competitive potential of the Catalan economy. It is precisely through this growth pattern, intensive in terms of labour and lacking in the continued presence of co-innovation processes, that work productivity evolves at worryingly low rates and that, in a competitive context dominated by globalisation, problems of competitiveness are relevant.

By contrast, another group of companies, a much smaller one (less than a fifth), base their growth potential on: a) interaction between investment in physical and intangible capital; b) human capital; c) strategic reorientation; d) new ways of organising production and work; and e) a continuous dynamic of innovation, particularly of a digital technological nature, but also in human resources management and employment relations. It is precisely in this second group of companies, clearly fewer than the first, but with much greater long-term growth potential, where the favourable evolution, both present and future, of the efficiency and competitiveness of our productive fabric is determined.

To summarise, and in light of the data obtained, it cannot be said that the Catalan economy, nor any economy, with serious problems of productivity and competitiveness is doing well, and much less so, will do well. Precisely due to its ability to anticipate, in the sense reflected by the potential for growth of an economy, we have detected symptoms that tell us that today the Catalan economy has a cold and that if we do not act correctly tomorrow, it could develop into pneumonia. The antidote to curing the cold is obvious. There are no secrets. To start with, a good diagnosis, a long-term vision that goes beyond election cycles, a firm will, even when it means taking unpopular measures, and a perception that there is no more time to waste, seem to me to be absolutely essential. Let’s hope, therefore, that employees, entrepreneurs, employers, unions, civil society, universities and, most especially, public policy do not curtail efforts to foster the new economic growth model that already suggests a small part of our productive fabric. Without an efficient and competitive productive fabric on a global scale there will be no elections that are worth it. The future is at stake.