Why the Brain in Spain Falls Mainly Down the Drain

Over the course of my three decades teaching at a business school in Madrid I have become increasingly concerned about why so few of my students are Spanish, and why my country has such a serious talent deficit.

Spanish salaries are not the lowest in the European Union, but their structure is certainly very dysfunctional. In other EU member states, emigration occurs across all social strata, and particularly affects lower-skilled workers. In Spain, it is relatively unusual for people with lower levels of education and specialization to emigrate, but is increasingly so for those with higher levels of education, who are unable to obtain salaries at home that compare with those in other countries.

I’m not an economist, but my experience is that the brightest and best graduates at my university tend not to stay and work in Spain after graduation. For foreign students coming from developed countries with similar characteristics to ours, staying in Spain would imply, in many cases, accepting lower salaries than they obtained before starting their studies, which makes no sense, even if we factor in relatively lower living costs and quality of life.

And it’s not just a problem in business: anyone who has contact with occupations such as healthcare, research or engineering, among others, will share my perspective. Not only is Spain incapable of attracting professionals in these areas, but its educational institutions are dedicated to producing graduates who in many cases are forced to emigrate in order to find not just a job, which is already difficult in a country with high unemployment, but one that pays well.

As a result, Spain has a chronic brain drain. This does not bode well for the future. Moreover, this is paradoxical in a country noted for its quality of life, its safety and its climate, which is much more benign than that of other neighboring countries, factors that undoubtedly also play an important role and should not be minimized. Spain has all the conditions to attract talent, but it does not do so because the salaries it offers are so low.

This, in the age of distributed work, poses even greater challenges: as my friend Santi García writes in his interesting article “Global jobs: global salaries?”, it is becoming relatively common for talented Spanish workers in areas such as software development to get offers from companies based abroad with much better salaries than those they can obtain in their immediate environment, which contributes even more to decapitalizing Spanish companies and making them less competitive.

Some cases are obvious: when a company like Spotify announced its work from anywhere policy, its Spanish office received many applications from workers from all over the world who wanted, now that they could, to live in Spain, a safe country with a good climate, a good healthcare system and generally pleasant conditions. The net result is an increase in headcount for the Spanish subsidiary, but with people who, in practice, work for other countries, although for operational and legal reasons they must be attached to the Spanish office.

This growing diaspora of foreign workers in Spain creates some interesting imbalances, because it generates, increasingly, a social stratum of people who work from Spain for foreign companies, receive higher salaries than average, and enjoy the quality of life in our country, without affecting their relationship with their employers in the slightest. On the one hand, they spend money and pay taxes here, contributing more than the average tourist (article in Spanish), but on the other, they distort the statistics and make it even more difficult for Spanish companies, many of which cling to practices like presenteeism, to consider attracting or retaining talent. If pre-pandemic Spain already had these problems, post-pandemic Spain has apparently exacerbated them.

Low salaries compared to our neighbors, paid by companies that insist they can’t pay more, coupled with high unemployment and attractive living conditions. The result is a paradox that is not particularly obvious, but nevertheless complex, and that does not auger well in the medium- to long-term.

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This post was previously published on Enrique Dans’ blog.

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