The highly competitive companies of the Valencian Community have levels of solvency to deal with their debt in the short and long term above the average of highly competitive companies throughout the country, as reflected in the latest report of the Observatory on Government, Strategy and Competitiveness of Companies (GECE) in collaboration with the Chair of Family Business , powered by Bankia and the Valencian Institute of Economic Research (Ivie).
In particular, its short-term solvency (which measures its ability to repay short-term debts with current assets) is 5.7 percentage points above the average ratio of these companies nationwide. In this case, only La Rioja, Navarra and Andalusia get better ratios. The Valencian Community also ranks fourth in the long-term solvency ratio (proportion of own funds to others), and its ratio is 22% higher than the average of highly competitive companies in Spain.
“It is important to have a good set of highly competitive companies, as they are the ones that will pull the recovery cart. There is still a long way to make the Valencian business structure become one among the best in the national area”
Alejandro Escribá
This starting point in terms of more favourable solvency levels gives highly competitive companies greater slack to withstand liquidity tensions to deal with the economic crisis caused by Covid-19. Their good relative to average competitiveness also gives them more options to withstand potential demand declines.
CCAA con mayor porcentaje de empresas competitivas y Comunitat Valenciana
Fuente: Observatorio GECE
Increased contribution to employment
The most competitive companies in each region are the most prepared to push the economy towards recovery, as they are the main driver of job creation and added value. The Valencian Community lags slightly behind the national average in terms of the percentage of companies that consider themselves highly competitive (1.7% below the national average).
However, its contribution to the employment and added value of the autonomous community is greater than the contribution of highly competitive enterprises at the state level. The employment generated in highly competitive companies is more than 8 percentage points higher in the Valencian Community than the national average, and the weight in wealth generation is 3.5 percentage points above the country average.
Fuente: Observatorio GECE
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Fuente: Observatorio GECE
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The importance of such companies is crucial nowadays, as they are competitive companies with excellent financial strength that puts them in a good position to face the difficulties imposed by a situation like the current one.
Productivity and wages
Comparison with highly competitive companies in other autonomous communities shows that highly competitive Companies in the Valencian Community excel in solvency compared to their national counterparts, but are below average in other respects.
They are significantly less large than those of regions such as Madrid or the Basque Country, and the weight of high-tech industries in this group of companies is much higher in other autonomous communities. The added value generated by highly competitive companies in technology sectors is almost three times higher in Madrid, and 2.6 times higher in Catalonia, compared to the Valencian Community.
The study also highlights employment productivity in highly competitive companies in Madrid and the Basque Country, which are able to generate added value per employee that doubles the productivity per employee of the most competitive companies of the Valencian Community.
The GECE Observatory also reviews the ability of these highly competitive companies to shift that productivity to better working conditions and generate greater capacity to attract human capital.
The average salary that employees receive in highly competitive companies is around 3,800 euros per year above the average of companies. Again, however, there are significant differences between regions. While in Navarra and the Basque Country the average wages of these companies rise to 49,900 and 48,200 euros on average, respectively; in the Valencia Community, average wages in the most competitive companies are around 34,000.
CCAA con mayor porcentaje de empresas competitivas y Comunitat Valenciana
Fuente: Observatorio GECE
Alejandro Escribá, researcher at Ivie and responsible for this observatory, points out that "the Valencian Community has a remarkable group of highly competitive companies, somewhat less substantial than desirable, but that are very good benchmark benchmarks for the rest of the companies that wish to improve their level of competitiveness."
"In a context like today, with programs and funding for economic renewal, we cannot miss the opportunity to evolve into more technological and knowledge models, take advantage of digitization, and bet on business growth," Ivie researcher and responsible for the GECE Observatory says.
*NOTE: Short-term solvency is calculated using the key figure: (current asset minus liquid liabilities/total asset). Long-term solvency is calculated using the ratio: own funds/other funds. Employment productivity is defined as Added Value/Employment.
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