PESTEL analysis of Spain
This detailed PESTEL analysis of Spain aims to address some of the political, economic, social, technological, environmental, and legal factors that affect Spain today. Spain is officially known as the Kingdom of Spain. It was once a world power and maintained a vast empire until the 19th century.
Political factors affecting Spain
Spain is a parliamentary democratic country. It is also a constitutional monarchy. The hereditary monarch is the Head of State and the Prime Minister is the head of government. Spain consists of 17 autonomous regions which are known as ‘Comunidades Autónomas’ in Spain. It is a member of a number of world’s powerful institutions e.g. the United Nations (UN), the European Union (EU), the Eurozone, the Council of Europe (CoE), the North Atlantic Treaty Organisation (NATO), the Organisation for Economic Co-operation and Development (OECD) and the World Trade Organisation (WTO).
Spain plays an important role in the EU and beyond, particularly in international security activities. However, political instability in the country has hurt its global image. Catalonia, a semi-autonomous region, has been campaigning for independence for a long-time. This has plunged Spain into its biggest political crisis for 40 years (BBC, 2019). The independence bid, regular demonstrations (pro & against), violent clashes, and jail sentencing of some Catalan politicians and activists have deepened the crisis badly. Spain also has a territorial dispute with the United Kingdom over Gibraltar. Likewise, disagreements between political parties and multiple general elections in a relatively short period do not do much good to the country. What Spain needs urgently is a political reconciliation.
Economic factors affecting Spain
The next element to address in the PESTEL analysis of Spain is the economic environment. Spain is the 13th largest economy in the world. Its Gross Domestic Product (GDP) for the year 2018 was $1426.19 billion which represented approximately 2.30% of the global economy (Trading Economics, 2019). The economy has been growing well for the last five years. It expanded by 2.5% in 2018. It is worth noting that Spain is one of the biggest contributors to the eurozone (Romei, 2019).
Spain faced severe economic challenges from 2007 to 2014 when it lost approximately 3.8 million jobs and the real wages fell by 10% as well. The economy has not recovered fully yet. As of September 2019, the unemployment rate is 14.2% which is the second highest in the European Union after Greece (Eurostat, 2019). The rate of poverty is high, and many jobs are temporary creating on-going uncertainties. However, exports have gone up and domestic consumer demand is on the rise as well.
The key industries that contribute significantly to Spain’s GDP are tourism, manufacturing, agriculture, energy, and electricity. Spain’s exports mostly end up in countries such as France, Germany, and Italy, while it imports consumer goods, machinery, chemicals, and other commodities mostly from Germany, France, and China (World Atlas, 2019). The general corporate income tax rate is 25% in Spain; however, other tax rates may also apply depending on the type of company.
Social factors affecting Spain
The people of Spain are called Spaniards. They are generally very friendly and perhaps more open to chat with anyone than most other European nationals. The total population of the country is 46.7 million as of 2019, and the major languages are Spanish, Catalan and its variant Valencian, Gallego, and Euskera. The life expectancy for men is 79 years, while 85 years for women (BBC, 2019). Life in Spain is generally relaxed which benefits from an excellent climate and a relatively affordable cost of living.
However, there are some social challenges facing Spain today. For example, the ageing population, pressure on the health care system, child poverty, low incomes, little credit, and drug epidemic particularly in big cities to name but a few. Likewise, the gap between the richest and the poorest families is also concerning.
Technological factors affecting Spain
Spain is an advanced nation in technology. It is one of the first countries in the EU to have issued all national identity cards in an electronic format. Spanish companies have been at the forefront of technological development and innovation. Their contributions in air and road traffic control, international securities, renewable energies, civil engineering, and mobile communications are well-known around the world (MIT Technology Review, 2019).
The Spaniards are well known for their widespread use of social media. The major social networks in use in Spain are Facebook, Instagram, Pinterest, Twitter, YouTube, Reddit, and Tuenti. However, it is worth noting that the country needs more IT staff. In fact, experts in ICT belong to high shortage occupations in the country.
Environmental factors affecting Spain
Spain is one of the greatest holiday destinations in the world. It is one of the sunniest countries in Europe. Its sunshine, world’s most visited cities such as Barcelona, Madrid, Valencia, Seville, and Malaga, great Alhambra, stunning beaches, ancient sites, beautiful mountains, and world class food make it a great tourist destination. In fact, tourism is one of the dominant industries contributing approximately 11% to the Spanish economy.
However, environmental challenges such as deforestation, air pollution, water pollution, and desertification have been some of the major concerns for the country. Likewise, over focus on tourism has been blamed for high levels of noise caused by airplanes and cruise ships, abuse of natural resources, and loss of public spaces.
Legal factors affecting Spain
The last element to address in the PESTEL analysis of Spain is the legal environment of the country. Spanish judiciary is independent; however, its reputation came into question due to Catalonia’s crisis. Direct or indirect discrimination in workplace is against the law and employees are entitled to protection and privacy. Full-time employees must work 40 hours a week (average), and they cannot work more than 9 hours a day unless there is an agreement in place.
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Last update: 08 November 2019
BBC (2019) Catalonia crisis in 300 words, available at: https://www.bbc.co.uk/news/world-europe-41584864 (accessed 03 November 2019)
BBC (2019) Spain country profile, available at: https://www.bbc.co.uk/news/world-europe-17941641 (accessed 05 November 2019)
Eurostat (2019) Unemployment statistics, available at: https://ec.europa.eu/eurostat/statistics-explained/index.php/Unemployment_statistics (accessed 04 November, 2019)
MIT Technology Review (2019) Explore the cutting-edge technologies emerging from Spain today, available at: http://icex.technologyreview.com/ (accessed 08 November 2019)
Romei, V. (2019) Spain leads the way on eurozone growth, available at: https://www.ft.com/content/12155b0c-3f56-11e9-b896-fe36ec32aece (accessed 04 November 2019)
Trading Economics (2019) Spain GDP, available at: https://tradingeconomics.com/spain/gdp (accessed 05 November 2019)
World Atlas (2019) The biggest industries in Spain, available at: https://www.worldatlas.com/articles/the-biggest-industries-in-spain.html (accessed 01 November 2019)
Photo credit: Pixabay
Author: M Rahman
M Rahman writes extensively online with an emphasis on business management, marketing, and tourism. He is a lecturer in Management and Marketing. He is a graduate of Leeds Metropolitan University and London South Bank University.