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The poor rich town of Arona

The Tenerife municipality is at the bottom of the personal income in Spain. It is, however, one of the 10 greatest concentration of high-income.

Arona is not a grey city. This touristic Canarian town is one of the three poorest cities in Spain when it comes to the average annual personal income (14,437 euro/year), but at the same time, a few of its residents is generating the highest income: only 23 of the residents is generating up to 6,5% of the total income, equivalent to 21,5 million euro,  according to the analysis of the Foundation for Applied Economic Studies (Fedea) on the personal income of Spanish towns with more than 50.000 inhabitants. 

The poor rich town of Arona - Eten Canarias

Arona is one of the main tourist areas of Tenerife with his popular destinations such as Los Cristianos and Playa de Las Americas. Annually receiving 1,4 million visitors and generating a income higher than 1.000 million euro of which most of it remains in the town. So how is it possible that this town ends up on the last positions of the counties personal income? 

Antonio Sosa, Vice Mayor of Arona, gives us some clues. “The great development of tourism in the town these last years has attracted on one hand, the major investors, and secondly, the population that is looking for an opportunity, employment in this sector.” Note that these workers do not enjoy a consolidated labour or economical situation. Onto this we can add “the influence of a black economy that implies to give services for which you declare a determinant quantity and get paid the other part in B.”

The paradigm of grandiosity in Arona represents the so-called Golden Mile, an exclusive shopping area full of boutiques, luxury jewellers, high-end restaurants and five star hotels. “The square meter costs 23.000 euros, and there are queues of domestic and foreign investors who are waiting for a marketplace to come free and pay what it takes to get the place,” says Roman Ivakhnenko, Eten Canarias Real Estate owner, who lives in the area. It’s evident that the attraction of the town stays huge for the ones who have the capital. 

The other side of reality coexists in the same place. Workers are earning wages of around 1.000 euro a month: local public relations, store clerks, cashiers in supermarkets,… At least here, they seem to be satisfied with their economic situation. Jose Jesus is from Asturias (mainland Spain) and is a bartender in one of the best restaurants located in the Golden Mile. He’s been on Tenerife for a year now and earns 1.200 euro a month, “plus tips” for a 40 hour week. “It is a luxury compared to the conditions that I had in a similar job in my home town, where I worked from sunrise till sunset for a whole lot less”, Jose said smiling while attending two tourists, seated at a table. 

The population growth that Arona experienced in just over 30 years has been exceptional. With 13.000 residents in 1981. They counted around 90.000 residents by the end of 2014. Numbers that serve Francisco Ramos, Professor of Economic Analysis at the University of La Laguna. He says: “This increase in population has delved into the differences, because growing that fast means growing in a disorderly manner.” Ramos added: “When the tertiary sector puts as much weight on the economy, like in this town where tourism counts for 60% of its wealth, mismatches are inevitable”.

The data analysis of Fedea is made from the income tax starting from 2007. Jorge Onrubia, one of the co-authors, believes that his hypothesis may show even a bigger gap in reality. “It’s normal that, as a result of the crisis, the inequality has grown,” he says. Tomas Perez, tax advisor in Arona says he has noticed, in the last years, among its employees wages’ reductions of up to 20% on the payrolls, at the same time that their workload has increased."

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