Ferran Portella: "We are becoming Venetianized, we are being expelled from the place where we produce because we cannot live there"

PalmaFerran Portella is a tenured professor of Economics at the UIB, and he analyzes for ARA Balears the existing dysfunction between square meter prices and the salaries of the islanders. He explains how the housing crisis has changed the perception and tolerance of citizens towards tourism excesses.

What is the specific problem of the Balearic Islands with housing?

— The Balearic Islands have a double problem. On one hand, they are the object of desire for thousands of Europeans with an average income higher than ours. On the other hand, we have a productive structure based on services, especially in hospitality and catering, where wages are low.

Does this productive structure condition the salaries of the Islands?

— Yes. The hospitality industry accounts for approximately 9% of wages in Spain as a whole, while in the Balearic Islands it exceeds 20%. And then there are similar subsectors directly associated with tourism that operate under similar conditions. All of this conditions the wage level of the Islands.

However, hospitality wages have risen considerably. In fact, the Balearic agreement is among the best in the State.

— Yes. This situation has forced employers to raise wages and, in fact, the hospitality industry in the Islands pays better than in many other territories. But these increases, even if they are significant, can in no way cope with living costs that are increasingly marked by the incomes of European middle classes that can double or triple those here.

When we think about foreigners buying homes in the Balearic Islands, we still have the image of very wealthy people. Is it wrong?

— It is incomplete. In the last decade, it is no longer just the rich buying there, not by a long shot. The European middle classes are also buying there. And this is a very important issue, because we are no longer talking about a small group of people with great fortunes, but about a much larger potential amount of the population.

You don't need to be rich in Germany, Switzerland, or the Netherlands to arrive here with more purchasing power than a Balearic family.

— Exactly. A person can be part of the middle class in their own country and, conversely, have an income that doubles or triples that of a person here. When this income enters the Balearic real estate market, the difference in purchasing power is very significant.

Is this difference between the purchasing power of visitors and that of residents new?

— No. 50 years ago, the European middle classes were already coming on vacation to the Balearic Islands and caused an initial impact due to their spending power relative to the island population. They have always had more capacity to spend here. What is happening is that, until relatively recently, the purchase of properties did not have this dimension.

What has changed in the last decade?

— That income gap that we previously saw mainly in tourist consumption has fully entered the real estate market. The purchase of homes has become massive. And I repeat: we are not just talking about millionaires, but also about European middle classes with an income considerably higher than the local one.

What social consequences does it cause?

— An expulsion that generates very strong social tension. For decades, islanders had more or less endured the limitations derived from tourism, because they are not new either. Stopping going to certain places at a specific time, for example a beach, because it was full of visitors. Giving up certain spaces and assuming certain inconveniences.

Why were they accepted?

— There was a certain resignation linked to that famous idea that 'we live off tourism'. In some way, these sacrifices were accepted because there was a perception that in exchange there was prosperity, work, and an improvement in the standard of living.

Has this perception ended?

— Yes. This is over, because citizens have seen that deprivations and impacts no longer have a reward. A family can have a job and, even so, not be able to buy an apartment or pay the rent. This completely changes the perception of saturation and, of course, the perception of tourism.

In this economy with low wages and such a high cost of living, what role does the migrant population have?

— It is fundamental. It is talked about a lot, but a very important part of the migrant population is precisely the one that sustains a large part of the productive structure of the Islands. It takes on many jobs in the service sector and associated activities that other people cannot or do not want to take on because, with the salary that is paid and the current cost of living here, it is very difficult to do so.

How do they manage to afford housing prices with these salaries?

— Many times assuming residential conditions that a part of the population would not assume. There are cases in which two and even three families share a dwelling. Sharing the cost of the flat allows supporting salaries with which, individually, it would be practically impossible to live in the Balearic Islands.

The problem of low wages does not disappear.

— No. In some way, tourism has externalized onto a part of the migrant population the contradiction between low wages and very high costs of living. The system continues to function because there are workers who accept much harsher housing conditions.

Does the system need this situation to function?

— If many of the people working in the service sector did not share housing, the system would have already had enormous difficulties sustaining itself. If all these workers had to pay current housing prices individually, with the salaries they receive, a significant part of the model would not be viable.

It is a paradox: the Islands need workers, but at the same time they make it difficult for them to live there.

— Exactly. We need labor to sustain an economic activity that continues to be very intense, but the territory is increasingly less capable of housing under normal conditions the same people who make this activity possible.

You speak of a 'Venetianization' of Balearic society. What does that mean?

— We are becoming Venetianized as a society: we are being expelled and leaving the places where we produce because we can no longer live there. It is not just a question of prices. A moment arrives when the noise, the saturation, and the loss of identity of these places are no longer bearable.

What does the case of Venice teach us?

— In Venice, residents leave the city area and can still find alternatives in the surroundings. Obviously, this has a very serious consequence, because it turns the city into a kind of set, without real life, without the citizens who built it and who lived their daily lives there. In the Balearic Islands, the expulsion has a different consequence. In Venice, you can leave the city and live relatively close by. In the Islands, leaving the place where you live can mean having to emigrate. This is happening.