Economy by Barandiaran

More Basques Than Ever Before

by Joseba Barandiaran

Gaindegia recently gave us two key figures about our country: there are 3.1 million people living in the Basque Country, more than ever before. And, unemployment is somewhere around 11%:  over 160,000 people are unemployed.

Demographics show very different trends across our geography: while the Basque Country’s population grew 2.7% in the last decade (0.3% in the last year), the coast of the province of Lapurdi and its surroundings show the greatest population growth (over 17% in Errobi, Bidaxune or Hazparne). On the other hand, the province of Zuberoa (-4.3%) and Erronkari-Zaraitzu (-14.6%), in the Pyrenees, suffer a population loss in that same period. Nowadays 79.8% of Basques live in urban areas and the urbanization trend continues. While Greater Bilbao, where one out of three Basques are currently living, may be losing a bit of its population (-1.1% in the last decade), it is expanding strongly towards its eastern seaside, with Plentzia-Mungia growing +11.2%; some studies already consider those towns a part of Greater Bilbao. Growth is also evident in the western seaside of Bilbao´s port, pushing the growth of Castro-Urdiales (Cantabria, Spain).

Meanwhile, the cities Vitoria-Gasteiz (+6.5%) and Pamplona (+7.7%) are drawing an ever-growing share of the population, economic activity and wealth in the provinces of Araba and Navarre, while some counties continue to lose inhabitants for instance, the mountains of Araba with -7.4%, or the area of Zangoza down by -5.4%. The province of Gipuzkoa is growing in a somehow more uniform way: the area of the capital San Sebastián is growing (+2.2%), and the surrounding area of Tolosa (+5.3%), Zarautz (Urola-Kosta, +5.9%) or Arrasate-Mondragon (+1.6%) also show positive trends. Its 700 thousand inhabitants could be soon considered a metropolitan area, connected to Lapurdi via the growth of Hendaye and Biarritz.

All this has strong implications for the Basque economy, which is concentrating most of its services and job opportunities around its biggest cities: Vitoria-Gasteiz and Pamplona inland, and Bilbao, San Sebastián and Bayonne on the seaside; also, most of the industry is there or in nearby counties (in the area of Durango growth is 3.3%), and throughout Gipuzkoa. While the governments in Navarre and the ACBQ (Autonomous Community of the Basque Country) support the high-speed railway as the main infrastructure that will connect the Basque cities of the Southern Basque Country among them (a huge investment, estimated in over 10 billion euros), and with Madrid, Bayonne and the French government seem to feel comfortable with its current railway and Biarritz´s airport, that basically link the coast of Lapurdi, in the Northern Basque Country, to Paris. So, there is no national strategy to link and network all Basque cities among each other.

As for unemployment, it may seem high for European or world standards, but it may fall rapidly in the next decade, not so much because of employment growth, but due to demographic trends. The Basque Country currently has a million people between 40-60 years of age; there are only 720,000 people between ages 20-40 and the population under age 20 is a little under 600,000. In 20 years, the gap in the working age population may be enormous, let alone the digital and technological capacities of those people, or the number of elderly people in Basque society. The Business Association Confebask and PwC estimated the deficit of workers the ACBQ may suffer in 10 years’ time to be over 100,000. Retaining and attracting human capital, qualified people for Basque industry and the advanced services sector, is probably the main economic challenge of our time. In the meantime, the average age of Basques has grown from 42.7 in 2011 to 43.6 in 2015 and it looks like this trend will continue, unless immigration changes it.

As for more recent news about the Basque economy in the beginning of 2018, the Basque Government recently made the first investment of what appears to be something like a sovereign fund: it spent 15 million euros to buy a 1.24% share of CAF, one of the best known Basque companies that offers railway solutions all around the world. CAF is based in Beasain (Gipuzkoa), and has a market cap of around 1.2 billion euros and earned 35 million in 2016. The government will not participate on CAF’s board (with its participation too small, as well as simply choosing not to), but the goal of the fund would be to preserve the Basque identity of key companies, improving relations with Basque suppliers, universities, technology centers, secondary or tertiary schools, especially regarding R+D+I activity, corporate movements, etc. This is the first move of a wider strategy that the Government intends to implement with a (sovereign like) fund that may reach some 250 million euros, and will try to involve public as well as private funds.

About the Author

Joseba Barandiaran
Joseba Barandiaran is an economist @barandiaranj | Mail | LinkedIn

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