Putting an official number on the Spanish sex trade

Statistics institute says GDP will grow up to 4.5% once black economy and other changes added

A billboard advertising a brothel close to Catarroja in Valencia.
A billboard advertising a brothel close to Catarroja in Valencia.Jesús Císcar

Several months ago two researchers from Spain’s National Statistics Institute (INE) paid a visit to the headquarters of an association called Heteria. The organization works to protect the rights of sex workers and is located in small premises in Madrid’s Fuencarral street. While there they spoke to Elisa Arenas, a social worker at the foundation, to try to find out if there were any current estimates of the total number of prostitutes in Spain. “It’s very hard to calculate,” Arenas explained at the time. “There have not been any serious studies – they just don’t exist.”

The INE researchers left empty-handed – except for one piece of data. Around 1,000 women come to Heteria for assistance every year. “But this figure is not comparable,” warned Arenas.

The INE workers were looking for a way to estimate how much money prostitution contributes to the Spanish economy. The government has been working to measure a part of the illegal economy, and incorporate it into the official calculation of Gross Domestic Product (GDP). This week it revealed its results: according to revised figures released by the INE on Thursday Spanish GDP increases by between 2.7% and 4.5% after illegal activities such as prostitution, drug trafficking and smuggling, together with other methodological changes, are included.

Other European countries have been doing the same. Portugal, for instance, on Thursday published figures showing that illegal activities accounted for around €700 million of GDP, around 0.4% of the total. Meanwhile, results from the United Kingdom indicate that prostitution, drug trafficking and smuggling account for around €12.3 billion. That’s 0.6% of GDP, according to a report released last week by the UK’s Office for National Statistics (ONS).

“A European Union regulation states that part of the illegal economy – prostitution, drug trafficking and smuggling – must be included in GDP calculations before 2016,” the INE explains. Government sources say Brussels is demanding an estimate of these changes to GDP before August.

At the end of last year, José Roca, a representative from Anela, an association of brothels, received a call at his Valencia office from the INE. It wanted to know if there was any data about turnover, costs and other such figures for the sector. To start with, Roca thought it was a joke. But when he received an official email from the INE he was finally convinced that it was a serious request.

The UK has found that prostitution, drug trafficking and smuggling account for around €12.3 billion of GDP

Shortly afterward he received a questionnaire from the statistics office with a number of questions. “How much did a prostitute charge on average for her services in the years 2002/2007/2012? What was the average number of services provided per prostitute a day in 2002/2007/2012? What was the average billing in 2012 for a normal/small brothel (fewer than 50 prostitutes) for renting rooms?” Roca answered as best he could: “€50/€70/€40” for the first question; “6/8/4” for the second; and “€50 per day/prostitute” for the last.

“It’s impossible to calculate,” explains Roca. “Any figure that we could give is random and subjective. There is no census for brothels, nor for prostitutes, average costs or services.

“It would be better for them to invent a figure,” he concludes.

Any figure is random and subjective. There is no census for brothels, nor for prostitutes”

A spokesperson from the EU’s statistics office Eurostat explains that “all of the EU countries include estimations of the unobserved economy within their GDP estimates, with the aim of providing an exhaustive measure of the size of their economy.” He adds that this has been necessary since the European System of Accounts went into force in 1995.

Countries such as Estonia, Austria, Slovenia, Finland, Sweden and Norway have long since included the impact of these illegal sectors in their official accounts. But other countries, among them Spain, have not done so until now. “From 2016 onwards it will be obligatory,” the INE explains.

The European statistics office admits that measuring these opaque sectors is very difficult. “There is some variation in the methodology between countries as to how to include all of this, but with time it is becoming harmonized thanks to the exchange of best practices and the recommendations of the European Commission,” the Eurostat spokesperson explains. There is, he adds, already an agreement on the methodology for estimating prostitution and drug trafficking, along with a document providing formulas for calculations.

Police sources estimate that they seize around 10% or 15% of the total amount of drugs smuggled in Spain

Official sources in Spain agree that such calculations are tricky, but also have methodologies to come up with estimates. For example, drug trafficking is measured based on the amount of narcotics seized by the authorities: total trafficking is extrapolated from this, allowing the police to come up with an approximation of the impact of the production and sale of drugs on the economy.

Take 2012, for example, the last year for which there are available figures: the police seized 21 tons of cocaine, 325 of hashish, and 229 kilos of heroin, with a street value of approximately €2.7 billion, which is nearly 0.3% of GDP (based on the unofficial value the police place on each substance). Police sources estimate that they seize around 10% or 15% of the total amount of drugs smuggled in Spain, but there is no official report on the issue. What’s more, the calculation depends on the purity of each drug and whether it is valued according to its wholesale price or its street value.

The authorities use a similar method for smuggling as they do for drugs. And as for prostitution, the number of people working in the sector will be calculated via the networks of brothels. This figure will then be extrapolated to give an estimate for the contribution to the entire economy. But the data so far collected does not look very consistent.

“GDP is calculated every quarter and the statistics will have to reflect the value of what is produced and the profits generated,” explains Ángel Laborda, the director of the Funcas thinktank. “But the reality will be very complicated, because there is no way to measure these activities on a quarterly basis.”

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