Macro Talent Management in Spain: Is the Sun Rising Again?

Abstract

This chapter draws a picture of macro talent management in Spain by providing information about the main environmental factors that shape current talent management policies and actions on a national level. Moreover, it shows the result of such environment in terms of Spanish competitiveness and talent stock using a wide array of international indexes. At present, Spain is more able to create, attract, and retain talent than in the past. All the indicators used here have dramatically improved in the long term, particularly after Spain’s entrance into the European Union. However, the national picture hinders important regional differences, analysis of which is unfortunately beyond the scope of this chapter.

Full text

5 Macro Talent Management in Spain
Abstract: This chapter draws a picture of macro talent management in Spain by providing
information about the main environmental factors that shape current talent management policies
and actions on a national level. Moreover, it shows the result of such environment in terms of
Spanish competitiveness and talent stock using a wide array of international indexes. At present,
Spain is more able to create, attract, and retain talent than in the past. All the indicators used here
have dramatically improved in the long term, particularly after Spain’s entrance into the
European Union. However, the national picture hinders important regional differences, analysis
of which is unfortunately beyond the scope of this chapter.

5 Macro Talent Management in Spain
Runninghead Right-hand pages: Macro Talent Management in Spain
Runninghead Left-hand pages: Adoración Álvaro-Moya et al.
5
Macro Talent Management in Spain
Is the Sun Rising Again?
Adoración Álvaro-Moya, Eva Gallardo-Gallardo and Jordi Paniagua
Introduction
An outlook of certain economic data, concerning the macroeconomic environment, would
suggest that Spain is a talent magnet or has a great potential to be a talent magnet in the near
future. For instance, in 2016 Spain had, for the first time since the start of the 2008 crisis, a
positive net migration flow as a result of both an increase in the number of immigrants and a
reduction in the number of Spaniards looking for a job abroad (INE, 2017a). A positive net flow
of people is usually attributed to the country’s relative social opportunities and economic
prospectus, which also act as talent attraction factors (Parkins, 2010; Khilji & Schuler, 2016). In
fact, according to the World Bank (2017), the Spanish economy ranked 13th by gross domestic
product (GDP) in 2016, and the Spanish recovery, starting in 2013, has been one of the strongest
in the OECD (OECD, 2017b). The job market is gradually improving, with employment annual
growth rates of around 3% (OECD, 2017b). And in the OECD Well Being Index, the Spanish
position has improved in most items since 2005, being above the average in terms of work-life,
health status, social support and personal security (OECD, 2017e, pp. 45 and 295).

5 Macro Talent Management in Spain
However, a more in-depth analysis of Spain’s position in different dimensions of macro
talent management (MTM) reveals possible weaknesses. For example, according to the Global
Competitiveness Report (2017–2018) of the World Economic Forum (WEF), Spain ranks 34th,
well below the largest European countries. Its position is particularly weak in relation to
innovation and the macroeconomic environment. Although it is gathering pace, Spain’s
productivity growth in the last years (2008–2015) is well below the OECD average (around 0%
and 0.5%, respectively) (OECD, 2017b), and there is still plenty of room to improve education
attainment. Not surprisingly, Spain ranks 44th in the WEF’s Human Capital Index.
The aim of this chapter is twofold. First, we seek to examine MTM in the Spanish context
by providing current information about the environmental factors that shape current talent
management (TM) policies and actions on a national level. Second, we are going to discuss the
impact of such environment in terms of Spanish competitiveness and talent stock using a wide
array of international indexes. The following section offers an overview of key facts about the
Spanish economy in the last decades. Next, MTM environmental factors are analysed in order to
look at their impact on Spanish competitiveness and talent outcomes in comparative perspective,
and the final section concludes.
Spain’s Economy Key Facts
With a gross domestic product (GDP) of USD 1,232,088 million in 2016, Spain is the fifth
largest economy in Europe, ranking 13th at world level (World Bank, 2017). Real GDP posted a
3.2% growth in 2016 (World Bank, 2017). According to the most recent economic forecast for
Spain (European Commission, 2017b), growth is set to remain robust but easy going forward.

5 Macro Talent Management in Spain
This report points to domestic demand as the main engine of growth, as strong job creation
supports private consumption and residential construction investment has rebounded. Exports,
furthermore, have accelerated and, since they are expected to continue growing faster than
imports, net trade should make a significant contribution to sustain GDP growth (European
Commission, 2017b).
“Spain is different” was a successful slogan aimed to attract tourism to Spain in the late
1960s that has endured as a sort of national motto (Afinoguénova & Martí-Olivella, 2008).
Spain’s long-term economic evolution, however, appears to be similar to that of Western nations,
being characterized by sustained growth since mid-19th century (Prados de la Escosura, 2017).
Although Spain has systematically ranked below other large Western European countries such as
Britain, France or Germany, falling even farther behind between 1850 and 1950, this is common
to other economies of the Mediterranean periphery, including Italy and Portugal (Tortella, 2000;
Aldcroft, 2016; Prados de la Escosura, 2017). However, they were all able to grow fast and catch
up with the Western leaders in the decades that followed (Figure 5.1).
[Insert Figure 5.1 Here]
Figure 5.1 GDP per capita, (PPP constant 2011 international $) in Spain, United States (US),
Italy, Germany, and Portugal (1990–2016)
Source data: World Bank (https://data.worldbank.org/)
A greater integration into the world economy and institutional change explain much of
these countries’ modernization. In the case of Spain, after autarky in the 1940s and, to a lesser
extent, in the 1950s, foreign trade, capital and knowledge fuelled its definite industrialization in
the 1960s and early 1970s (Muñoz, Roldán, & Serrano, 1978). The United States and a handful

5 Macro Talent Management in Spain
of Western European countries (Britain, France and Germany) consolidated as main trade
partners and foreign investors in the country at that time (Puig & Álvaro-Moya, 2016). Economic
openness coincided with the definite rehabilitation of Spain in the international economic forum,
after the diplomatic isolationism that characterized the first years of Franco’s dictatorship (1939–
1975), particularly during the aftermath of the second world war (Guirao, 1998; Powell, 2011).
For instance, Spain joined the United Nations (UN) in 1955, the International Monetary Fund
(IMF) in 1958, and the Organization for Economic Co-operation and Development (OECD) in
1961.
But the 1960s fast and technology-dependent growth, in the context of a still highly-
intervened and protectionist economy but archaic Treasury and public sector, ultimately led to
external deficit, poor industry competitiveness, institutional weakness and ultimately crisis and
social unrest by the time of Franco’s death in 1975 (Serrano & Pardos, 2002). Institutional
reform, and economic stabilization and liberalization, then took place amidst the global oil crisis
of the 1970s, to culminate with Spain’s entrance into the European Economic Community (today
the European Union [EU]), in 1986 (Rojo, 2002). Since then, Spain has enjoyed full
membership, joining the European Monetary Union and adopting the euro as domestic currency
in 2002. Although today Spain is a net contributor, for a long time the country was a net receiver
from the EU budget, getting funds for regional investment policies, agriculture, rural
development and the modernization of national infrastructure, which fuelled growth (Almunia,
2011).
As a member of the EU, the Spanish economy has followed the common expansion-
recession cycle of other European countries, although with higher volatility levels (García
Delgado, 2014; Jiménez & Martínez Serrano, 2014). Spain inaugurated the 21st century, for

5 Macro Talent Management in Spain
instance, with a strong expansion period, but to be more adversely affected by the 2008 crisis
than most European countries. This resulted in a rapid increase of income inequality, which is
still among the highest in the European context (European Commission, 2017c). The institutional
reform of the late 1970s included the 1978 Constitution, which set up a parliamentary monarchy
with separation of powers and a set of civil and social rights according to EU standards (Powell,
2016). The Constitution also stipulates legislative and executive powers for the 17 regions, or
“autonomous communities”, that comprise the country, and recognizes as official languages
along with Spanish other spoken languages in the Basque Country, Catalonia, Valencia, Balearic
Islands and Galicia communities (Constitución Española, 1978). By virtue of the “State of
Autonomies”, as this territorial organization is called, regional governments have jurisdiction to
intervene in education, infrastructure and taxation issues, among others (López-Bazo &
Motellón, 2017a). Although they also have financial autonomy, their revenue also depends on
the central government, which mediates in an inter-territorial funding scheme that seeks to
reduce regional economic disparity.
In the Varieties of Capitalism literature, Spain has been characterized along with other
Southern European countries as a “mixed market economy” (Molina & Rhodes, 2007) or “state-
influenced mixed market economy” (Royo, 2007), a category that falls aside the traditional
liberal market economies (such as the United States) and coordinated market economies
(Germany and France, for example) (Hall & Soskice, 2001). In mixed market economies, the
State plays a key role in facilitating the coordination of business actors (large firms, business
associations and trade unions) to compensate for the lack of autonomous self-organization of
business and labour (Molina & Rhodes, 2007). This coordination task takes place also at the
regional level (Royo, 2009).

5 Macro Talent Management in Spain
In Spain, as predicted by economic theoryconomic growth and integration of national
markets led to increasing income inequality in the early years of development (between 1850s
and 1900s) to fall afterwards, particularly in the second half of the 20th century and the
consolidation of Spain’s modernization (Martínez-Galarraga, Rosés, & Tirado, 2015). Regional
differences, however, were still notable in 2016, when only four Spanish regions (Madrid, the
Basque Country, Navarre and Catalonia; all them in Northern Spain apart from Madrid, where
the capital of the country is located) surpassed the European average in terms of per capita GDP
according to Eurostat website (http://ec.europa.eu/eurostat). Regional disparity within Europe
has been associated with the structure of labour markets, localization factors and the presence of
a solid industrial base (Amendola, Caroleo, & Coppola, 2006). Regarding the latter, Catalonia is
the region with the largest manufacturing sector and the largest share of manufacturing firms that
pledged to innovate in product and process, followed by Madrid, the Basque Country and
Navarre (López-Bazo & Motellón, 2017b). In fact, the share of firms performing R&D activities
in a continuous way is between one quarter and one third in Catalonia, the Basque Country and
Madrid, far beyond the numbers in low innovative regions, which are also specialized in the
tourism sector (López-Bazo & Motellón, 2017a, 2017b). These differences are also related with
regional cluster policy, explained later in the chapter. Spatial differences, finally, also concern
population and thus talent concentration (Ayuda, Collantes, & Pinilla, 2010). High-skilled
workers tend to concentrate in the most innovative regions (López-Bazo & Motellón, 2017b).
Nowadays, the Spanish productive sector is characterized by the marked influence of the
tertiary sector and the low presence of the industrial sector, a common fact among developed
countries). In fact, 74.1% of GDP in 2016 is generated by services, followed by industry and
energy (17.8%), construction (5.6%) and agriculture (2.6%), according to Spain’s National

5 Macro Talent Management in Spain
Institute of Statistics (INE). Correspondingly, 58.7% of the active companies belong to the
service sector (excluding commerce at23%), and services represent the majority of jobs. Only
6.1% of the companies are from the industrial sector while 12.3% belong to the construction
sector (INE, 2017b). After six consecutive years of reduction, in 2014 the number of active firms
started to grow again, rising from 3.1 million that year to nearly 3.3 in January 2017 (INE,
2017b). Micro SMEs are by far the most common type of companies in Spain, accounting for
94.5% of all enterprises (INE, 2017b). At the same time, Spanish companies have
internationalized fast in recent times, inaugurating Spain’s 21st century as a net exporter of
capital, which contrasts with the country’s historical position (Guillén, 2005). We will look more
in-depth at these issues in the following pages.
The Macro Talent Management Environment Factors
in Spain
Educational System
Economists have long linked human capital, understood as the stock of skills, abilities and
knowledge embodied by individuals aimed at improving their job performance, with firm
productivity and country competitiveness (Lucas, 1988; Barro, 1991). Human capital is also of
great relevance when dealing with TM. Indeed, De Vos and Dries (2013) propose to refer to
‘talent’ as the human capital in an organization that is both valuable and unique. According to
the economic mainstream, human capital is based on two pillars, education and training, and
health (Goldin, 2015). Life expectancy at birth, usually considered as a proxy to population’s
health, in Spain is among the highest in the Euro area according to OECD data, and standards in

5 Macro Talent Management in Spain
education have greatly improved in the last years (Ministerio de Educación, Cultura y Deporte,
2017a). We focus on the latter here.
The Ministry of Education regulates education in Spain. However, regional governments
are responsible for managing and financing schools in their territories. The structure of the
educational system in Spain by age according to the International Standard Classification of
Education of 2011 (UNESCO, 2011) is in Appendix 5.1. It is divided basically into five stages:
Nursery and preschool (early childhood educational development and pre-primary), which is
optional until age 5; primary and secondary education, both compulsory, until age 6 and 10/11,
respectively; upper secondary education, optional, and until age 12; and university/higher
studies. After lower-stage secondary education, it is possible to follow alternative vocational
training studies, which end at age 20 at its highest level (vocational training advanced level
degree), and studies focus on music and dance. There are also mechanisms to facilitate students’
transfer from vocational training to upper-stage secondary and university education.
Lessons in Spanish state schools are taught in Spanish, but also in the regional language,
such as Catalan, Galician or Basque, when corresponding; and the study of, at least, a second
language (namely English) is compulsory (www.expatica.com/es/education/Education-in-
Spain_103110.html). As part of an initiative between Spain’s Ministry of Education and the
British Council, some state schools offer a bilingual integrated Spanish-British curriculum.
Nearly 25% of children in primary education and 15% in secondary are following it (Ministerio
de Educación, Cultura y Deporte, 2017b, p. 29). On average, 68% of children attend state
schools, although the range varies from 51% to 83% by region (Ministerio de Educación, Cultura
y Deporte, 2017b, p. 6).

5 Macro Talent Management in Spain
Higher education in Spain dates back from mediaeval times. Today, there are 76
universities, most of them publicly funded. Undergraduate studies consist of four years and 240
ECTS, well above the 180 ECTS of most EU countries (Michavila, Martínez, & Merhi, 2015,
p. 11). Masters degrees range from one to two years (60–120 ECTS) and PhD from three to five
years. Concerning undergraduate studies, 26% of tertiary-educated individuals studied science,
technology, engineering and mathematics (i.e., STEM studies) in Spain, one of the largest shares
across OECD countries, followed by business, administration and law (around 25%) (OECD,
2017c). Women, however, are underrepresented in STEM studies, although they are predominant
in education and health studies (Ministerio de Educación, Cultura y Deporte, 2017b, p. 22). Less
than 3% of enrolled students are foreigners, most of them from the European Union, Latin
America and the Caribbean (Michavila, Martínez, & Merhi, 2015, p. 28). This figure is far below
the German (7%), French (11%), Swiss (16%), and British (17%) among others (Michavila et al.,
2015, p. 29). But, at the same time, Spain is a very popular destination for those benefiting from
European student exchange programs, as well as one of the largest countries sending students
abroad under the Erasmus schedule (Michavila et al., 2015, p. 31). With the purpose of
promoting not only student mobility, but also the attraction of talent at all levels (including staff)
and the internationalization of research, the Spanish government has recently launched a very
ambitious program to foster the internationalization of the Spanish university (Gobierno de
España, 2014).
Different Spanish universities are highly ranked according to several rankings (Times
Higher Education’s World University Ranking, 2018; World University Rankings, 2018;
Academic Ranking of World Universities, 2017). These are: Pompeu Fabra University,
University of Barcelona, University of Granada, Autonomous University of Barcelona,

5 Macro Talent Management in Spain
Autonomous University of Madrid, Complutense University of Madrid, University of Santiago
de Compostela, Polytechnic University of Valencia, Universitat Jaume I, University of the
Basque Country, University of Navarra, and University of Valencia.
Public spending on education in Spain has been around 4% of the GDP for the last
several years, compared with the almost 5% European average (European Commission, 2016).
According to the Education and Training Monitor 2017 (European Commission, 2017a), public
expenditure on education can be split into four categories of transactions: (a) ‘compensation of
employees’ (i.e., gross salaries and social contributions for teaching and non-teaching staff); (b)
‘intermediate consumption’ (i.e., purchase of non-durable goods and services needed to provide
education); (c) ‘gross capital formation’ (i.e., investment in acquiring fixed assets and durable
goods and buildings); (d) ‘other expenditure’ (covers the residual variety of transactions,
including subsidies in the form of transfers to households and payments to private schools; it
reflects the organization of education provision). Spain ranks above EU average on
‘compensation of employees’ (almost 70%), and in ‘other expenditure’ (above 20%) categories.
However, it ranks at the minimum in the ‘intermediate consumption’ (7,5%) and the ‘gross
capital formation’ (5%) dimensions. Public spending per student is also below the European
average: USD 6,970, USD 8,528 and USD 12,489 in primary, secondary and tertiary education,
respectively, compared to the USD 8,803, USD 10,360 and USD 16,164 of EU-22 average
(OECD, 2017a, p. 6). Note that public spending on education covered all stages of the
educational scheme described previously, but concentrates in primary and secondary education,
with 34% and 28.6%, respectively, of the total (Ministerio de Educación, Cultura y Deporte,
2017b, p. 10). Regarding university, public and private spending as percentage of GDP is
comparable to the EU average (1.3% and 1.4%, respectively; Michavila et al., 2015, p. 35).

5 Macro Talent Management in Spain
Data on educational attainment in Spain offers a rather contradictory picture. Early
abandonment of education is higher compared to the European average (19 and 11%,
respectively, in 2016); particularly in southern Spain, with rates over 20% (Eurostat, 2016;
European Commission, 2017a, p. 60). The share of adults with only primary studies or low-stage
secondary studies has decreased from 50.3% in 2006 to 47.7% in 2016, but it is still quite above
the OECD average of 22.4% (Ministerio de Educación, Cultura y Deporte, 2017b, p. 7). A small
percentage of young adults, furthermore, are enrolled in vocational education and training
programmes, 12% compared to the 25% OECD average, despite the fact that those with a
vocational qualification have a higher employment rate than those with a general qualification
(74% and 63%, respectively) (OECD, 2017c). But, at the same time, the share of adults with
tertiary studies is today 41%, around the OECD and EU averages (43% and 40.1%, respectively).
Many experts conclude that Spain lacks vocational training professionals, while the country
cannot offer enough job opportunities, not only due to circumstantial reasons such as the 2008
crisis, to people with tertiary studies (Dolado, 2015). Not surprisingly, emigration of talented
nationals has increased in the last years, as explained in the following section.
Since 1980, when the Spanish education system was reorganized for the first time under
democracy, there have been seven reforms, usually coinciding with changes in the political party
ruling the country (Berengueras & Vera, 2015). In order to improve education results and
enhance communication and cooperation among all the actors involved, the Spanish Parliament
began in spring 2017 to draft a proposal for a Social and Political National Pact on Education,
which set the terms for long-lasting education reform (Cervilla, 2017).
Demographics and Migration

5 Macro Talent Management in Spain
By the end of 2017, Spain had a population of nearly 50 million people, which implies that it is
the 28th most populated country in the world according to CIA World Factbook (2017). The
intensive expansion period of the early 2000s had a significant impact on Spanish demography.
As Figure 5.2 shows, Spanish population has been fairly constant until 2000, where the
population was exponential and maintained high values until the 2008 economic downturn.
[Insert Figure 5.2 Here]
Figure 5.2 Population Growth (annual %) in Spain, US, Germany, Italy and Portugal (1980–
2012)
Source data: World Bank (https://data.worldbank.org/)
Most of the population growth during the expansion years is attributed to an increase in
migration flows, as seen in Figure 5.3. In the last 20 years or so, Spain has passed from a country
of emigrants to an attractive destination for foreigners. In the late 1990s, less of 2% of the
residents were foreigners, while today this figure is 10%, similar to the European average (Delle
Femmine & Alameda, 2017; INE, 2017a; Martin, 2013). Compared to other OCDE countries,
migrants in Spain are more often of working age and have a low or middle educational
attainment (OECD, 2017d, p. 5). Spain’s ability to attract foreign labour and human capital
during this period is unprecedented and superior to most advanced economies. Although there
have been changes over these years, most of the immigrants have come from the north of Africa
(Morocco particularly), Latin America and Eastern Europe (Delle Femmine & Alameda, 2017).
A large part of migration flows is, however, within the country’s territory. Particularly in the
most recent years, the richest regions (such as Madrid, Barcelona and the Basque Country) have
attracted many workers looking for job opportunities and better wages (INE, 2017a).

5 Macro Talent Management in Spain
[Insert Figure 5.3 Here]
Figure 5.3 Net Migration in Spain, US, Germany, Italy and Portugal (1972–2012)
Note: the US data is on the right axis
Source data: World Bank (https://data.worldbank.org/)
The increasing foreign-born population of the years before the 2008 crisis has not
supposed a significant opposition against immigration like in other European countries. This is
attributed to Spain’s history as an ‘emigrant country’, particularly in the 1960s, when in the
context of agriculture mechanization and rural flight many Spaniards left the countryside towards
the country’s largest industrial cities (such as Barcelona, Bilbao and Madrid) and Western
Europe (Germany and Switzerland, among other) (De la Torre & Sanz Lafuente, 2008).
Furthermore, in Spain’s political culture immigration is understood as a vehicle to enhance
democratic values and, compared to other countries, the low visibility of immigrants make them
unperceived as a threat to national identity (Arango, 2013). Both immigrants and native-born,
furthermore, show preference for assimilation of local values, rather than differentiation, in the
process of adapting to other cultural framework, what it is related with low levels of conflict in
intergroup relations and fewer prejudices (González López & Ramírez, 2016). Certainly, the
2008 crisis has moved the Spanish government, particularly under the rule of the conservative
Popular Party, very critical with its socialist predecessor, to more restrictive policies (Ullán de la
Rosa, 2016; Arango, 2013). But the economic situation, although it has promoted the emergence
of new political forces and captured largely disgruntled voters, has not fuelled the rise of anti-
immigration parties like in other European countries (Carbajosa, 2015; Buck, 2017).

5 Macro Talent Management in Spain
The crisis of 2008, however, caused a significant percentage of immigrants to return
home, particularly after 2013 (Parella & Petroff, 2014). The Spanish government, in fact,
actively promoted this with return policies that financed part of the travel and relocation
expenses. At the same time, a growing number of Spaniards have decided to look for jobs
abroad, particularly young people with university studies, which has led to fears of brain drain
(Lorca-Susino, 2011; González Ferrer, 2013). In fact, resident population increased 0.19% in
2016, but had been going down since 2011 (INE, 2017a). The migratory balance was indeed
negative between 2009 and 2016 (INE, 2017a; Delle Femmine & Alameda, 2017). And between
2010 and 2014, Spain lost 10% of its researchers, who emigrated due to the lack of job and
promotion opportunities, as well as 10% of its resources (INAECU, 2016).
The decrease in immigration rates along with the brain drain and returnees amplify one of
the main threats to the Spanish economy in general and to its MTM potential in particular:
population aging. As Figure 5.4 shows one of the challenges of Spain and most advanced
economies is to cope with an aging population. A particularly simple solution is to attract young
foreign talent. This remedy has the caveat of the short migration cycle, which follows closely the
economic expansion-contraction cycle seen in Figure 5.1.
[Insert Figure 5.4 Here]
Figure 5.4 Population by age in Spain
Note: The black line indicates population in 2016 and the yellow line corresponds to 2050
projections.
Source data: Gapminder.org

5 Macro Talent Management in Spain
Changes in migration trends have also had an impact on migration policies. Migration
policies in Spain had traditionally focused on the assistance to the national migrant (Sánchez-
Alonso, 2011). This changed with Spain’s entrance into the European Union and, above all, the
impressive arrival of immigrants in the last decades of the 20th century. Since then, the
migratory policy has focused on regulating the entry of foreigners. The first law to this respect,
which was very restrictive and dictated by the EU in 1985, was liberalized in 2000. By doing so,
social services (such as health and education) were ensured to both illegal and legal immigrants
(Arango, 2000; Sánchez-Alonso, 2011). However, control of sea and land borders has been
intensified over the last years, which can be linked not only to the global economic crisis but also
to European guidelines.
National and regional governments in Spain have been at the same time pursuing policies
aimed to palliate the brain drain, attracting foreign talent and aiding the return of expatriates.
Most of these initiatives have been focused on young scientists like the national programs
“Programa Severo Ochoa” and “Programa Ramón y Cajal”, as well as regional initiatives in
Catalonia, Madrid, Andalusia and Galicia, among others. These initiatives are making Spain
more attractive for highly talented individuals from other countries (Martin, 2015).
Domestic Labour Market
The structure of the labor market has changed more profoundly in Spain than in
any other Western European country in the past twenty years [1975–1995]. No
other country has seen its unemployment rate rise as dramatically and stay so
persistently high.
(Franks, 1997, p. 7, dates added)

5 Macro Talent Management in Spain
In fact, the high and persistent level of unemployment is, unfortunately, one of the most relevant
characteristics of the Spanish labour market even today (Andrés & Doménech, 2013).
During the dictatorship (1939–1975), Spain had a rigidly state-controlled labour market
that was characterized by the prohibition of free trade unions, the setting of basic wages at a very
low level, and the establishment of a quasi-tenured employment system that made it very
difficult to fire workers by establishing a severance pay for dismissals (Ballester, 2005; Franks,
1997). Since 1975, the Spanish labour market policy has focused not only on deregulation and
flexibility but also on a reduction of labour costs and, in the first years of democracy, the
development of a collective bargaining system (Ballester, 2005). In fact, the last reform
undertaken in 2012 promoted the internal flexibility of firms and reduced dismissal costs for
permanent workers, which contributed to significant wage moderation and increased hiring on
permanent contracts (OEDC, 2013). For a summary of the main labour reforms in Spain see
Appendix 5.2. It is interesting to note here, however, that, during many years employment issues
have been subordinated to macroeconomic stability (González-Calvet, 2002).
Along with the credit crunch and the trade collapse of 2008, structural weaknesses of the
Spanish economy surfaced during the Great Recession. The global financial and economic crisis
hit the Spanish labour market particularly hard in comparison with other European countries
(Pérez Infante, 2016). The unemployment rate in Spain reached 26.7% in October 2013, which
was more than three times the OECD average (7.9%) (OECD, 2017a). Even more serious is the
fact that long-term unemployment, as a share of all unemployment rose from 19.1% in fourth
quarter 2007 to 50.4% in third quarter 2013 (OECD, 2017a). Certain southern regions (i.e.,
Andalusia, Canary Islands, Ceuta and Extremadura) suffer long-term unemployment rates of

5 Macro Talent Management in Spain
more than 30%, according to Eurostat. Youth unemployment is even worse, with nearly 50% of
the population under 25 unemployed.
Spain has paid a high price for an economic model excessively based on construction and
real estate. In fact, the largest number of job losses was in the construction sector, the engine of
the Spanish economy (Chislett, 2013). Job losses after 2008 also certainly hit temporary workers
much harder than those on permanent contracts, which can be seen responding to economic crisis
through adjustment of employment rather than through application of internal flexibility
(Horwitz & Myant, 2015). Together with the increase in unemployment, wages in Spain have
also had a negative trend. Since 2010 to 2014, the real wage has decreased in more than 7%,
which means a considerable loss in purchasing power. Even the monetary wages have decreased
since 2012; it should be said that this devaluation concentrates on those employees with lowest
wages, whereas high salaries have been continuing to increase despite the economic crisis (Pérez
Infante, 2016).
The labour market situation in Spain has continuously improved over the past three years:
employment, as a share of the population aged 15–74 years, has increased by more than 4%,
whereas the unemployment rate has decreased by more than 8% since 2013 (OECD, 2017a;
European Commission, 2017b). In fact, at 17.8% in April 2017 the unemployment rate remains
the second highest among OECD countries, and about 9% higher than its pre-crisis level (OECD,
2017a). Likewise, youth unemployment has decreased by almost 20% since September 2013 to
October 2017. Despite this good news, unemployment remains stubbornly high and below its
pre-crisis percentage.
The counterpart for all this is that Spain ranks in the bottom third of the OECD countries
in terms of labour market security and job strain. The share of working-age persons living on less

5 Macro Talent Management in Spain
than 50% of the median income (16.5% of total) is the highest among OECD countries.
Moreover, the employment gap of disadvantaged groups (such as mothers with children, youth,
older workers, non-natives, and disabled people) is also worse than average in OECD countries
(OECD, 2017a). But, according to the most recent Eurostat data on this issue (2015), the gender
pay gap, that is, the difference in average wages between men and women, is in Spain similar to
the EU-28 average (15%).
Foreign expatriates, however, perceive Spain, as an attractive destination. According to
the Expat Explorer Global Report of HSBC, Spain is for the third consecutive year the second
best country, after New Zealand, for foreign expatriates in terms of life experience (HSBC, 2017,
p. 8). More than half of expats interviewed had chosen Spain as a destination to improve their
personal lives in a wide array of aspects, including physical health, social life and climate
(HSBC, 2017, p. 66). Around one third adapted easily to the new country and 66% felt right at
home in less than one year. Furthermore, 24% consider Spain as a right market to start a new
business (a percentage which has increased in the last years), which might lead to growing direct
investment after the British Brexit.
Entrepreneurship
Employer’s attractiveness matters to attract talented people (Collins & Kanar, 2013). This indeed
explains the increasing attention to employer branding by human resource scholarship. Literature
has long discussed the attributes related with companies’ attractiveness, including economic and
tangible aspects such as salary package and location, as well as subjective perceptions, such as
prestige and reputation (Berthon, Ewing, & Hag, 2005; Srivastava & Bhatnagar, 2010). Large
and global companies have had traditionally a greater potential of developing renowned brands

5 Macro Talent Management in Spain
than smaller firms. This is the reason why, dealing with MTM, we look at firm structure and
entrepreneurship in the case of Spain.
The Spanish business fabric is characterized by a high weight of the services sector and a
much lower presence of industrial activities. Correspondingly, as of January 2017 near 93% of
firms in Spain were related somehow with services including transportation (data of January
2017; DIRCE database). Most of them are small and medium enterprises (SMEs), having less
than 249 employees according to the EU standards (http://ec.europa.eu/growth/smes/business-
friendly-environment/sme-definition_es). This predominance of SMEs is common to the largest
countries in Europe, such as Germany and Great Britain (Fariñas & Huergo, 2015). What
distinguishes Spain, and other Mediterranean countries such as Italy, from them is the much
higher percentage over employment and value added that the smallest firms represent. For
instance, microenterprises (less than 10 employees) count in Germany for 20% of employment,
but 40% in the case of Spain. And while 37% of the working population in Germany work for
big companies, the Spanish figure is only 23% (Fariñas & Huergo, 2015, pp. 7–8).
Interestingly, 52.67% of all active enterprises had 0 employees, which means that most
Spanish firms are businesses run by self-employed individuals (INE, 2017b). However, Spain is
very alike to the EU-28 in which 93% of all enterprises are micro SMEs, and 56% of all active
enterprises had 0 employees (European Commission,2017d). Several factors affect both the
supply and demand for self-employment, such as the increasing importance of the ‘gig’
economy, and the ‘sharing’ or ‘collaborative’ economy; a change in attitude from Millennials
towards operating as independents in the labour market, rather than entering into a long-term
employer-employee relationship; and downsizing and outsourcing to independent workers of

5 Macro Talent Management in Spain
activities previously undertaken in-house by companies (European Commission, 2017a, pp. 48–
49).
This growth in self-employment can be seen as stimulus for entrepreneurship and
increment of the economy’s dynamism and flexibility to changing circumstances. However, a
recent report by Eurofound (2017) shows that while 54% of self-employed chose to, 26% self-
employed because they had no other alternative to work. In fact, in Spain more than a quarter of
full-time self-employed people are at risk of poverty and social exclusion (Eurofound, 2017).
This lack of job alternatives we have referred to is related to the effects of the 2008 crisis and the
slow economic recovery, but also to self-employees’ qualifications. A recent report highlighted
that 42% of those self-employed have basic compulsory education (double the average of the
UE-28), and, despite the fact that training has advanced significantly in recent years, only 24.8%
have university studies (Fundación BBVA-Ivie, 2016).
Regarding ownership, 89% of Spanish firms are family firms, representing 57% of GDP
and 67% of total employment (data for 2013; Instituto de la Empresa Familiar, 2015). In Europe,
family businesses account for around 60% of all firms, and 40–50% of all jobs (according to
European Family Businesses), but, in the United States, 80–90% of firms are family businesses,
generating 63% of GDP and representing 57% of employment (Instituto de la Empresa Familiar,
2015). Although most family firms are small or microenterprises, there are also many examples
of large multinationals.
One of the most remarkable outcomes of Spain’s liberalization has been the rise of
multinational firms, particularly after 1986 (Durán & Sánchez, 1981; Guillén, 2005; Guillén &
García-Canal, 2011). We look at this phenomenon as an indicator of corporate entrepreneurship
(Zahra & George, 2002). At the end of 2016, Spain has the EU’s sixth-largest stock of direct

5 Macro Talent Management in Spain
investment abroad (UNCTAD, 2017). Outward foreign direct investment stock was of more than
USD 500,000 million, around four times more than in the year 2000 (UNCTAD, 2017, p. 226).
The Spanish firms that have led this process are to a large extent either former public or private
monopolies and state-owned firms (Telefónica, Repsol, Iberdrola, Gas Natural Fenosa, Iberia
and Endesa, to name a few included in Forbes’ World’s Biggest Public Companies ranking);
banks (Santander, BBVA-Banco Bilbao Vizcaya and Caixabank, for instance); or family firms
(Inditex, Ferrovial, Grifols, FCC and Acciona, among others). Spanish investment abroad
initially focused on Latin American and Western Europe, due to geographical and cultural
factors and the opportunities brought about by massive privatization in 1990s Latin America
(Durán, 1999; Toral, 2001; Martín & Toral, 2005), but the United States and Asia have received
increasing attention in recent years (Observatorio de la Empresa Multinacional Española, 2015;
Datainvex). Recent studies explain the fast rise of Spanish multinationals by a combination of
relational, networking, management and project execution capabilities (Guillén & García-Canal,
2011) and the ability to internalize foreign knowledge historically acquired through partnerships
and other alliances (Puig & Álvaro-Moya, 2016; Fernández Pérez & Díaz Morlán, 2015).
To what extent is the Spanish government promoting entrepreneurship? A comprehensive
way to deal with such a broad issue is the World Bank’s Doing Business Index (World Bank,
2014). The relevant aspects are shown in Table 5.1. Spain ranks 28th; far below the US although
around the average of the OECD high-income countries. Spain performs particularly well
regarding “Trading Across Borders” —this factor includes time to export and cost to export
across borders, and it is related to the country’s transportation infrastructures; “Protecting
Minority Investors”; and “Taxes”. The country’s weaknesses are related above all with legal

5 Macro Talent Management in Spain
procedures, like “Dealing with Construction Permits”, “Getting Electricity” and “Registering
Property”. In general, however, Spain performs like other high-income countries.
Table 5.1 Spain, Italy, France, Germany and US rank (out of 190) according to the DB 2018
Rank World Bank’s Doing Business Index*

5 Macro Talent Management in Spain
Area
Spain
Rank
Italy
Rank
France
Rank
Germany
Rank
US
Rank
Overall: Ease of Doing Business
28
46
31
20
6
Starting a Business
86
66
25
113
49
Dealing With Construction
Permits
123
96
18
24
36
Getting Electricity
42
28
26
5
49
Registering Property
53
23
100
77
37
Getting Credit
68
105
90
42
2
Protecting Minority Investors
24
62
33
62
42
Paying Taxes
34
112
54
41
36
Trading Across Borders
1
1
1
39
36
Enforcing Contracts
26
108
15
22
16
Resolving Insolvency
19
24
28
4
3

5 Macro Talent Management in Spain
Note: This index looks at 10 areas and examines the extent for local entrepreneurs to start and
run a small to medium-size business when complying with relevant regulations. Countries are
ranked on their ease of doing business, from 1 (the most supportive environment to establish a
new business) to 190 (the least supportive).
Source: www.doingbusiness.org/rankings
Regional governments also play an important role in enhancing entrepreneurship. The
best examples of this are the policies developed to promote clusters in two of the most traditional
industrial regions, the Basque Country and Catalonia. Clusters are understood as a geographic
concentration of interconnected manufacturers, suppliers and associated institutions in a
particular industry (Porter, 1990). By driving innovation, productivity gains and the creation of
new businesses, clusters make companies compete in some aspects (market share, for instance)
while cooperating in others, such as R&D and training programs. Clusters, furthermore, have
proved to improved competitiveness, so not surprisingly the last EU Cohesion Plan (2014–2020)
aims to innovate by exploiting the knowledge, skills and assets that regions, rather than nations,
possess (European Commission, 2013).
As early as 1991, and as a response to industrial crises in the late 1970s and 1980s, the
Basque Country government decided to adapt its industrial policy to create a supportive
environment for the development of clusters and firm internationalization (Valdaliso, Elola,
Aranguren, & López, 2011; Royo, 2009). This has led to remarkable growth since then. The
success of the export-oriented Electronics, IT and Telecommunications Cluster of the Basque
Country (one of the largest and oldest), and the Basque aeronautical and space cluster, for
instance, relies on domestic firms’ capabilities and accumulated experience, the regional

5 Macro Talent Management in Spain
government’s financial support, and knowledge sharing within related sectors (López García,
Elola, Valdaliso, & Aranguren, 2013; López García & Valdaliso, 2011). Similar examples can be
found for the motor and agricultural industry in Catalonia and the shoe sector in Islas Baleares
(Catalan, Miranda, & Ramon, 2011). Catalonia launched in 1993 its first cluster initiatives,
followed soon by other regions and, since 2009, all supported by the National Federation of
Innovative Business Groups (Novo, 2014). However, it was not until 2006 that the Spanish
central government developed the first national program to support clusters, including the
creation of a national registry for “Innovative Business Groups”.
National Culture and Country Image
Cultural norms, values and beliefs are considered powerful forces shaping the dominant decision
makers’ perceptions, disposition and behaviours, which in turn affect those choices made
regarding the intended HRM strategy (Paauwe, 2004; Paauwe & Boselie, 2003), and so TM
strategy. In fact, there is evidence of the need for companies to tailor their programs for
managing talent with sensitivity to local country culture conditions (e.g., Cooke, Saini, & Wang,
2014; Sidani & Al Ariss, 2014). Indeed, both national and organizational culture is seen as of
increasing importance for the management of talent (see Thunnissen & Gallardo-Gallardo,
2017), since they provide explanations to attitudinal and behavioral variation between human
communities that can help to delineate the appropriateness of TM policies and practices in a
particular context. When considering cross-cultural dimensions the two best known frameworks
are: the 6-D model by Hofstede (1980), Hofstede, Hofstede and Minkov (2010) and the GLOBE
CEO study (House, Hanges, Javidan, Dorfman, & Gupta, 2004). According to Hofstede’s
cultural dimensions, the Spanish culture is characterized by high power distance, and short-term

5 Macro Talent Management in Spain
orientation. In other words, Spain is a hierarchical, normative and restrained society. Indeed,
hierarchies are very clear and are respected, people do not expect power or rewards to be
distributed evenly among the society, and actions are restrained by social norms. Moreover,
traditions and norms are sacrosanct and family life is guided by imperatives. In comparison with
other European countries (except for Portugal), it is collectivist (i.e., people belong to strong,
cohesive in-groups, often extended families, that take care of them in exchange of loyalty). In
other words, Spaniards have a ‘we’ consciousness, stress on belonging and try to maintain
harmony. That is why teamwork is considered as something natural, and could explain why there
is low mobility. Furthermore, it is more feminine than masculine, meaning that caring for others
and quality of life are more important than competition and success. The uncertainty avoidance
dimension clearly identifies Spain. It is considered the ‘second noisiest country in the world’ in
which people like to have rules for everything; confrontation is avoided; and changes, ambiguous
and undefined situations cause stress and scale up to the personal level very quickly (Hofstede
Insights). Thus, it explains why most Spanish students want to work in civil service (i.e. a job for
life, no concerns about the future) or in multinationals rather than in SMEs (which are the type of
firms that define Spanish productive system) or that aim to create their own business (Jaurégui,
Carmona, & Carrión, 2016). The GLOBE study of CEO Leadership Behavior and Effectiveness
(House, Dorfman, Javidan, Hanges, & Sully de Luque, 2014) shows similar results. Spain
belongs to the Latin Europe cluster together with France, Israel, Italy, Portugal and Switzerland.
Spaniards are characterized by high power distance, short-term orientation, in-group
collectivism, low assertiveness, performance orientation, and uncertainty avoidance. Moreover, it
is a male-dominated society.

5 Macro Talent Management in Spain
A term connected with national culture and, in particular, with the perceptions about
national culture, is ‘country image’, or people’s beliefs, ideas and impressions about a certain
country (Kotler, Haider, & Rein, 1993). Country image, therefore, also affects talent attraction
and retention. As a relatively backward country within Europe, Spain has traditionally dealt with
a poor country image. This is the leitmotif for initiatives such as “Marca España” (Spain’s
brand). In 2012, the Spanish government launched this program to improve the perception of
Spain abroad as well as within. The initiative of the ‘Marca España’ project responds to the need
to coordinate the different public and private actions on the Spain brand, to convey to companies
and institutions the importance of having a good image of the country, and to inform them about
how to communicate and “sell” the new reality of Spain (Nicolás, 2003).
In the last report of Observatorio Imagen de España (Observatory for Spain's country
image), Spain had a mark of 7.1 (out of 10), similarly to the United States and slightly lower than
Japan and the European leaders, but much better than the Asian, Latin American and African
countries considered in the sample. This position has improved in the last years. Although
country image differs among countries, in general the Spanish language and culture is very
positively perceived, but Spanish products still lack a reputable ‘Made in Spain’ brand (Real
Instituto El Cano, 2017). Spanish goods are indeed perceived as of low-quality and low
technological content, to a lesser extent in the case of traditional agrarian exportations, such as
wine and olive oil. From the point of view of foreign investors, Spain still needs to promote
professional training and foreign languages.
The main cause of most of these negative aspects seems to be attributed to the absence of
a State policy, in the sense that in Spain there is a notable deficit, especially at the public or

5 Macro Talent Management in Spain
institutional level, regarding the need to export the ‘Made in Spain’ brand, which contrasts with
the enormous concern of other countries (ICEX, 2003; Real Instituto El Cano, 2017).
Macro Talent Management Outcomes
To assess the outcomes of macro talent management in Spain, we consider in this section a wide
array of comprehensive and well-known international indexes, which include key variables
connected with talent. We follow here a comparative perspective, evaluating the Spanish position
in relation to the United States, the largest European economies (Germany and France) and other
Mediterranean countries (Italy). In a globalized world, to what extent a country attracts or repels
talent depends on what competitors (other countries) are doing to catch talent, which justifies the
comparative perspective. The choice of countries to be compared to, on the other hand, responds
to Spain’s historical economic evolution. As explained previously, Spain and the Mediterranean
periphery have traditionally lagged behind the US and the economic centre of Western Europe.
We want to address to what extent this is also reflected in these countries’ relative position in
international indexes.
How we approach talent management outcomes entailed a relevant limitation. As the
indexes we look at are at a national level, we put aside regional differences, which, at least in the
Spanish case, seem to be wide. Spanish regions not only have historically enjoyed a different
level of development, and business and job opportunities, but also regional governments have a
great autonomy in education policy and other issues closely related with talent management.

5 Macro Talent Management in Spain
The World Economic Forum’s “Global
Competitiveness Index”
The Global Competitiveness Index (GCI) elaborated by the World Economic Forum (WEF)
measures the economic micro and macroeconomic foundations of national competitiveness,
looking at the set of institutions, politics and factors that determine the productivity level (and
potential growth) of a given country (World Economic Forum, 2017a). In the latest report (2017–
2018), Spain ranks 32nd of 138, being better positioned than other Mediterranean countries like
Italy (44th), but far below Germany (5th) and US (3rd). Spain’s relative position has not changed
significantly in the last years.
Table 5.2 Spain, Italy, France, Germany and US rank (out of 138) according to the Global
Competitiveness Index 2016–2017

5 Macro Talent Management in Spain
INDEXES
Spain
Rank
Italy
Rank
France
Rank
Germany
Rank
US
Rank
Overall Index
34
43
22
5
2
Sub-indexes
Basic Requirements
33
51
26
11
25
Efficiency Enhancers
30
43
20
6
1
Innovation and
Sophistication factors
38
28
17
3
2
PILLARS
Description
Spain
Rank
Italy
Rank
France
Rank
Germany
Rank
US
Rank
Institutions*
Examines the institutional
environment which includes
the legal and administrative
framework
54
95
31
21
20

5 Macro Talent Management in Spain
Infrastructure*
Looks at the infrastructure of
a country (i.e., available
modes of transport,
electricity supplies,
telecommunication
networks)
12
27
7
10
9
Macroeconomic
environment*
Examines the stability of the
macroeconomic environment
of a country
90
96
63
12
83
Health and
Primary
Education*
Examines investments in the
provision of health services,
and the quantity and quality
of basic education
32
25
24
13
29
High Education
and Training**
Measures secondary and
tertiary enrolment rates, and
the extent of staff training
28
41
22
15
3
Good Market
Efficiency**
Analyses efficiency of the
goods markets
49
60
36
11
7

5 Macro Talent Management in Spain
Labour Market
Efficiency**
Looks at the efficiency and
flexibility of the labour
market
70
116
56
14
3
Financial
Market
development**
Examines the well-being of
financial and economic
activities
68
126
33
12
2
Technological
readiness**
Looks at the agility with
which an economy adopts
existing technologies
28
41
21
8
6
Market size**
Examines the size of the
markets by considering both
domestic and foreign
markets
17
12
8
5
2
Business
sophistication***
Looks at the quality of a
country’s overall business
networks and the quality of
individual firms’ operations
and strategies
29
25
16
5
2

5 Macro Talent Management in Spain
Innovation***
Looks at the investment in
research and development
(R&D), especially by the
private sector; the presence
of high-quality scientific
research institutions;
extensive collaboration in
research and technological
developments between
universities and industry;
and the protection of
intellectual property
42
34
17
5
2
Note: *Those pillars belong to the Basic Requirements sub index;
**Those pillars belong to the Efficiency Enhancers sub index;
*** Those pillars belong to the Innovation and sophistication factors sub index.
Source: World Economic Forum (2017a)
The GCI comprises 12 pillars. The pillars that relate the most to MTM are the 3rd Pillar
(Macroeconomic Environment), 4th Pillar (Health and Primary Education); 5th Pillar (High
Education and Training); 7th Pillar (Labour Market Efficiency); and 12th Pillar (R&D
Innovation). As shown in Table 5.2, in general Spain does not outrank any apart from Italy. Only
regarding Health and Primary Education, Spain outranks a leading country, the United States,

5 Macro Talent Management in Spain
like the other Europeans, which also enjoy a public and universal healthcare system. Spain has
historically had a very weak position in terms of innovation (López García & Valdaliso, 2001;
Sáiz, 2005). According to World Bank data (World Bank, 2017), research and development
expenditure (as % of GDP) was 1.2% in 2015, which contrasts with the nearly 3% of Germany
and the United States, and the 2.14% of the Euro area. The number of researchers in Spain has
also gone down in the last years as highlighted earlier. But, at the same time, research
productivity in Spain increased between 2010 and 2014 according to a wide array of indicators
(IUNE, 2016).
The Institute of Management Development’s ‘World
Talent Report’
The World Talent Report published by the Institute of Management Development (IMD)
compares and ranks countries on three factors: (a) Investment and Development; (b) Appeal; and
(c) Readiness. According to this report, the overall Spain ranking in 2017 is 30 out of 63
economies (table 5.3). Note that Spain has improved 9 points since 2015. Table 5.3 shows that,
again, Spain usually lags behind US, German and French benchmarks, but it is particularly well
positioned in ‘Appeal’, that is, regarding the ability to attract and retain talent.
Table 5.3 Spain, Italy, France, Germany and US Rank (out of 63) according to the IMD World
Talent Ranking 2017.

5 Macro Talent Management in Spain
Factor
Description
Spain
Rank
Italy
Rank
France
Rank
Germany
Rank
US
Rank
Investment and
Development
Measures the investment
in and development of
home-grown talent
30
33
20
10
29
Appeal
Evaluates the ability of a
country to attract and
retain talent
25
41
29
8
2
Readiness
Quantifies the quality of
the available skills and
competencies in the
talent pool
41
34
28
15
24
Source: IMD (2017, pp. 29–31)
INSEAD’s “Global Talent Competitiveness Index”
INSEAD’s Global Talent Competitiveness Index (GTCI) allows us to focus on core MTM
processes which include knowledge spill overs, learning and knowledge sharing, institutional
support, educational leadership, corporate strategy and leadership. Specifically, the GTCI ranks
countries on 6 pillars to determine their ability to grow, attract and retain talent. As shown in
Table 5.4, differences between the United States and the rest of the sample are significant for

5 Macro Talent Management in Spain
most items. If we look now within Europe, Spain and Italy rank again worse than the others
(particularly regarding vocational skills), but the Spanish position is comparable to the largest
European economies in terms of ‘Growth’, that is, the opportunities for formal education,
lifelong learning and access to growth. However, the participation of adults in lifelong learning
in Spain is only close to the European average, around 47% according to the PIAAC’s Survey of
Adult Skills elaborated by the OECD (data of 2013; OECD, 2016b; Felgueroso, 2016; INE,
2017b). Spain is situated better than France and Italy (less than 40% in both cases), and not
significantly below Germany (51%).
Table 5.4 Spain, Italy, France, Germany and US Rank (out of 118) according to the Global
Talent Competitiveness Index (GTCI) 2017.

5 Macro Talent Management in Spain
GTCI
Spain
Rank
Italy
Rank
France
Rank
Germany
Rank
US
Rank
Overall Position
35
40
24
17
4
PILLAR
Sub-pillars
Spain
Rank
Italy
Rank
France
Rank
Germany
Rank
US
Rank
ENABLE
43
62
34
14
11
Regulatory Landscape
36
57
31
12
22
Market Landscape
32
30
18
3
5
Business and Labour Landscape
96
102
99
45
7
ATTRACT
41
64
26
20
16
External Openness
50
82
19
22
21
Internal Openness
32
45
36
18
12
GROW
23
28
18
20
2
Formal Education
25
22
18
13
2

5 Macro Talent Management in Spain
Lifelong Learning
28
57
18
32
8
Access to Growth Opportunities
29
31
23
33
3
RETAIN
30
41
25
11
8
Sustainability
51
48
36
12
4
Lifestyle*
7
31
19
14
33
VOCATIONAL and TECHNICAL
SKILLS
48
31
7
1
20
Mid-level Skills
63
19
7
4
28
Employability
34
60
29
3
11
GLOBAL KNOWLEDGE SKILLS
32
39
24
26
3
High-level Skills
26
45
22
27
2
Talent Impact**
49
32
25
27
12
Note: *Lifestyle is measured by taking into consideration ‘environmental performance’,
‘personal safety’, physician density’, and ‘sanitation’.

5 Macro Talent Management in Spain
**Talent impact is measured considering ‘innovation output’, ‘high-value exports’, ‘new product
entrepreneurial activity’, and ‘new business density’.
Source: Lanvin and Evans (2017, pp. 156, 158, 170, 220, 232)
Program for International Student Assessment
The OECD ranks countries on their levels of educational attainment for many age categories.
One of its most famous rankings is the Program for International Student Assessment (PISA),
which ranks 15-year-old students on the basis of their achievement in math, sciences and
reading. Both Spain and the United States do relatively poorly on the PISA scores with respect to
the OECD average as shown in Table 5.5. The only subject where Spain has a greater score than
the United States is math, but both are behind the OECD average.
Table 5.5 Spain, Italy, France, Germany and US Rank according the Programme for
International Student Assessment (PISA)* 2015

5 Macro Talent Management in Spain
Mean Score in
Mathematicsa
Mean Score in
Readingb
Mean Score in
Sciencec
PISA 2015
PISA
2012
PISA
2015
PISA
2012
PISA
2015
PISA
2012
Spain
486
484
496
488
493
496
Italy
490
485
485
490
481
494
Germany
509
514
506
508
509
524
US
470
481
497
498
496
497
OECD Average
490
494
493
496
493
501
Note: * PISA examines the extent to which 15-year-old students have acquired important
knowledge and skills that are essential for full participation in modern societies.
a In 2012, the highest ranked country (Shanghai-China) achieved 613 and the lowest (Peru) 368;
whereas in 2015 were 564 (Singapore) and 328 (Dominican Republic).
b In 2012, the highest ranked country (Shanghai-China) achieved 570 in Readiness and the
lowest (Peru) 384; whereas in 2015 were 535 (Singapore) and 358 (Dominican Republic).
c In 2012, the highest ranked country (Shanghai-China) achieved 580 in Science and the lowest
(Peru) 373; whereas in 2015 were 556 (Singapore) and 332 (Dominican Republic).

5 Macro Talent Management in Spain
Source: OECD (2014, 2016a)
The World Economic Forum’s Human Capital Index
The Global Human Capital Index assesses how well countries are developing their human capital
according to different dimensions and differentiating by age group. Spain ranks 44th, and is
behind most EU countries (Table 5.6). This is also the case for the four sub-indexes included,
with differences particularly striking in terms of ‘Development’. The Spanish position is
influenced there by the relatively poor vocational education enrolment rate and quality of the
education system in the age group 15–24, and low extent of staff training for the age group 25–
64 (World Economic Forum, 2017b, p. 167), which is consistent with the educational prospectus
provided in a previous section. Deficiencies in vocational training also help to understand why
the score regarding know-how in medium-skilled workers is relatively low regarding other
countries.
The overall Spanish position is also explain by relative high unemployment and
underemployment rates, particularly among the younger people, which are included in the
‘Deployment’ sub-index. While unemployment refers to the share of active people jobless,
underemployment considers to what extent workers use all their skills, education, or availability
at their jobs. Spain, therefore, is not taking enough advantage of its workforce’s human capital
potential, particularly in the case of the youngest, and high-qualified, professionals. The
Deployment sub-index, however, also takes into account the labour force participation rate in the
age group 65 years and over. Retirement age in Spain is 65 (extended recently to 67), which
explains the low score obtained there.

5 Macro Talent Management in Spain
Spain, however, is one of the high-income OECD countries. This is reflected in the
human capital indexed with high scores in terms of ‘Capacity’, which includes literacy rates and
attainment rates at the different stages of education. Included in ‘Development’, Spain is very
well positioned regarding enrolment rates at primary, secondary and tertiary education; as well as
skill diversity of graduates. It even ranks 1st in secondary enrolment gender gap (0–14 age
group).
Table 5.6 Spain, Italy, France, Germany and US Rank (out of 130) according to the Global
Human Capital Index 2017

5 Macro Talent Management in Spain
INDEXES
Spain
Rank
Italy
Rank
France
Rank
Germany
Rank
US
Rank
Overall Index
44
35
26
4
6
Sub-index
Description
Spain
Rank
Italy
Rank
France
Rank
Germany
Rank
US
Rank
Capacity
Level of formal education of
younger and older generations
as a result of past education
investment
66
41
39
22
29
Deployment
Skills application and
accumulation among the adult
population
30
28
20
4
12
Development
Formal education of the next-
generation workforce and
continued upskilling and
reskilling of the current
workforce
101
107
86
43
40

5 Macro Talent Management in Spain
Know-How
Breadth and depth of
specialized skills use at work
31
23
14
13
7
Note: This index ranks countries according to how well they are developing their human capital.
Although not included here, the index differentiates by age group (0–14 years; 15–24 years; 25–
54 years; 55–64 years; and 65 years and over).
Source: World Economic Forum (2017b, pp. 3 and 8)
Conclusion
In this chapter we have provided information about the main environmental factors that deal with
the creation, attraction and retention of TM in Spain. Moreover, we have discussed the result of
such environment in terms of Spanish competitiveness and talent stock using a wide array of
international indexes. Thus, the following interrelated questions arise: Is Spain able to create,
attract and retain talent? And to what extent is Spain able to compete with others for talent?
It is not possible to give an answer to these questions without defining and measuring
talent first. At some point in this chapter, inspired by economic theory and in line with Makram,
Sparrow and Greasley (2017), we have used the term ‘human capital’ as a synonym of talent
resources. In fact, according to Cappelli (2008), ‘at its heart, talent management is simply a
matter of anticipating the need for human capital and setting out a plan to meet it’ (p. 1). When
looking at talent through the human capital lens we are referring to the unique stock of
knowledge, capabilities, skills, competencies, social and personality attributes possessed by a
person, and embodied in the ability to perform labour so as to produce economic value

5 Macro Talent Management in Spain
(Farndale, Scullion, & Sparrow, 2010; Sparrow & Makram, 2015). In fact, economists have long
linked human capital to those personal attributes aimed to improve individuals’ job performance
along with firms’ productivity and countries’ competitiveness (Lucas, 1988; Barro, 1991).
In order to measure Spanish talent on a macro level, and going with the economic
mainstream, we should focus on two pillars (Goldin, 2014): education and training, and health.
Starting with the latter, and as mentioned before, Spain ranks at the top of the European Union in
terms of life expectancy at birth, which is considered a proxy to a population’s health; and a bit
lower regarding perceived health and coverage of the publicly funded healthcare system
according to the OECD data. However, Spanish data on education is not so positive. Although
enrolment and attainment rates are comparable to the European average, particularly for the
youngest (see, for instance, the Global Human Capital Index), Spain still has plenty of room to
improve in terms of adult and vocational education. The results in the PISA analysis suggest that
learning effectiveness needs to progress as well. Hence, Spain still has issues about generating
talent, compared with the leading world countries, although much less than in the past. Note that,
for instance, the share of adults with only primary studies or low-stage studies has decreased
over the last decade and that several Spanish universities are highly ranked according to different
World University rankings. Indeed, increasing public spending on education would help to
achieve better improvements. Moreover, providing better learning opportunities for students
from environments with limited access to education, educating for digitalization, and helping
with the integration of females in STEM degrees are interesting subjects for further action that
can also help to improve the achievements on developing talent in Spain.
But, what about attracting and retaining talent? If we measure this as job opportunities
and job quality, in both cases Spain fails compared to top economies. Apart from the structural

5 Macro Talent Management in Spain
unemployment problem, the 2008 crisis affected Spain more negatively than central Europe
countries, which clearly limited job opportunities over the last decade. Although growth and
recovery is giving pace, job quality has deteriorated in the last years leading to an increasing
income inequality within the Spanish society. Despite these facts, and as we have discussed in
previous sections, Spain is a very popular and attractive destination for not only those benefiting
from the European student exchange programs, but also, for expatriates. In fact, Spanish
language, local culture and, above all, quality of life are very positively perceived for foreign
talent. Within the country, however, there are few regions that act as talent magnets. Specifically,
Madrid, Barcelona and the Basque Country regions have historically attracted many qualified
Spanish workers looking for job opportunities and better wages. Indeed, Madrid, Bilbao, and
Barcelona rank among the top twenty world cities considered key players on the global talent
scene according to the Global City Talent Competitiveness Index 2017. Note that national and
regional governments in Spain have been at the same time pursuing policies aimed to palliate the
brain drain, attracting foreign talent and aiding the return of expatriates. Although these
initiatives are improving Spanish position on the global talent scene, much still remains to be
done.
To sum up, two main conclusions can be drawn. First, at present, Spain is able to create,
attract and retain talent significantly more than in the past. All the indicators used in this chapter
have dramatically improved in the long term, particularly after Spain’s entrance into the
European Union. Second, the national picture hides important regional differences. Although this
chapter does not deal with MTM at regional level, in the previous pages we have highlighted
several times how a few regions are better positioned than the national average in different
indicators related to talent management, acting as talent pools at least at the national level. This

5 Macro Talent Management in Spain
is largely the result of industrial policies designed by regional institutions, but also promoted at
national and even EU levels. In fact, the EU Cohesion Policy for the next years (2014–2020)
spins around regions as sources of national and global competitiveness. Indeed, an interesting
further research avenue would be to analyse macro talent management in a long-term and
regional perspective.
[Insert Figure 5.5 Here]
Figure 5.5 Unemployment, total (% of total labour force) (modelled ILO estimate) in Spain, US,
Germany, Italy and Portugal (1991–2017)
Source data: World Bank (https://data.worldbank.org/)
[Insert Appendix Figure 5.1 Here]
Appendix 5.1 Structure of the Spanish Education System
Source: OECD. Education GPS (http://gpseducation.oecd.org/CountryProfile)
Appendix 5.2 Summary of Main Spanish Labour Market Reforms
Source: Ballester (2005), Bertelsmann (2004), Horwitz & Myant (2015), Laparra & García
(2003), Martín (2004), OCDE (2013) & Toharia (1997).

5 Macro Talent Management in Spain
Year
Main objective
Some effects
1984
Introduction of temporary
contracts in order to increase
flexibility; young people and
long-term unemployed were
the main targets of the
reform
Small, though non-negligible, effect on employment
growth
Importance rested in the increase of turnover
Led to the creation of a gap between the cost of
dismissal of temporary and permanent contracts, and
the widening of the scope of temporary contracts
Temporary contracts increased
1994
Enhance the role of
collective bargaining; a
deregulatory reform.
Elimination of the fixed-term employment promotion
contract, which led firms to use other forms of
temporary employment (low-cost or high-flexible)
Reduction of dismissal costs in order to recognize the
rights of firms to dismiss workers for economic reasons
Eased labour mobility and working hour flexibility, and
temporary work agencies were introduced

5 Macro Talent Management in Spain
1997
Enhance the competitiveness
of Spanish firms by reducing
both temporality and
rotation, whilst promoting
continuous training
Linked to the Tripartite
Agreement on Continuous
Training
Decrease in the number of temporary contracts
Changes in the role of the temporary work agencies
Augment the reasons for objective dismissals
Introduction of a new permanent contract, with lower
dismissal costs than the existing one, and with tax
benefits
Positive effects: 80% of net employment created after
the reform was permanent employment
2001
Promote stable and
indefinite contracts
Limit abuse in the use of
temporary contracts Promote
female, part-time and groups
with special difficulties
employment
Increased flexibility by widening the applicability and
scope of the new permanent contracts, by reducing
dismissal costs for normal permanent contracts, and by
making the working times for part-time and
discontinuous permanent workers more flexible
Introduced a limited compensation for the sacking of
temporary workers

5 Macro Talent Management in Spain
2002
Reduce the number of
unemployed receiving
unemployed benefit for
lengthy periods
Unemployed people were forced to sign a written
commitment with the employment office and the
definition of suitable job was altered
Unemployment protection was reduced for
discontinuous permanent contracts, and interim wages
were to be abolished
2010
Reduce labour market
dualism and increasing
flexibility; ‘align pay with
productivity’ (i.e., to reduce
wages)
Modification of multi-employer agreements through
bargaining at company level
Conditions for fair dismissal were merely clarified by
the inclusion of explicitly economic, organizational,
technical and production-related reasons as grounds for
fair dismissal
Increased severance pay for temporary contracts and
generalized the severance pay subsidy scheme to all
employers and types of dismissal for permanent
contracts signed after the date of approval of the reform

5 Macro Talent Management in Spain
2012
Restore competitiveness by
aligning labour costs more
closely to productivity and
allow employers to exploit
more easily internal
flexibility measures
Make the labour market
more dynamic and less
segmented
Gave absolute priority to enterprise-level agreements
over those established at the sector or regional level,
and made it easier for firms to opt-out of a collective
agreement and implement internal flexibility measures
(e.g., introducing changes to working conditions, such
as working hours or wages) as an alternative to job
destruction
Redefined the conditions for a fair dismissal (i.e., a
dismissal is always justified if the company faces a
persistent decline in revenues or ordinary income;
moreover, the firm does not have to prove that the
dismissal is essential for the future profitability of the
firm)
Reduced monetary compensation for unfair dismissal
and eliminated the requirement of administrative
authorization for collective redundancies
A new permanent contract for full-time employees
(Contrato de Emprendedores) in small firms was
introduced, entailing and extended trial period of one
year. During this trial period, workers can be dismissed

5 Macro Talent Management in Spain
for no reason and without compensation. Moreover, the
use of such contracts allows firms to claim several tax
benefits
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