The Spanish economy entered a deep recession in 2020 due to the COVID-19 pandemic. A strong government response has protected jobs and firms. However, the crisis has exacerbated long-standing structural challenges, such as high unemployment, inequalities and regional disparities. The national recovery plan will help the near-term recovery and should also be used to promote long-term growth potential. A durable and inclusive recovery will require improving the quality of jobs via lower labour market segmentation, better skills and enhanced support for job seekers. Reforms to secure the pension system’s sustainability will be key to address medium-term fiscal challenges. Spain is improving on digitalisation, but there is room to improve the uptake and use of digital technologies to boost productivity growth.Enhancing digital diffusion requires addressing remaining gaps in digital infrastructure and enhancing capabilities of firms and people to take full advantage of digitalisation via higher investment in innovation and skills.

SPECIAL FEATURE: ENHANCING DIGITAL DIFFUSION FOR HIGHER PRODUCTIVITY