Why the EU construction sector is steadily outperforming the US
Both European and American construction productivity has fallen since the start of the 2000s. Surprisingly, though, contractors across the EU have managed to outperform their US counterparts.
Without strategic initiatives aimed at boosting productivity and competitiveness, the EU risks falling behind its global rivals – at least, that's what the Draghi report tells us. This mainly applies to industries competing worldwide, like the manufacturing sector, and less so for the locally oriented construction sector. While the productivity development of the EU manufacturing sector lags behind its US counterparts, the construction sector in the EU outperforms that of the US. Yet, both regions have experienced a decline in labour productivity in construction. Still, a greater focus on productivity-enhancing measures could partly solve persisting labour shortages. For instance, we previously calculated that a 20% higher productivity rate in EU construction would result in 2.5 million fewer construction workers being needed.
Decline in construction labour productivity
Construction labour productivity lags considerably behind manufacturing. It has almost doubled in the US manufacturing sector over the past 25 years, meaning that manufacturing workers can now produce twice as much in the same number of hours. In the EU, this has risen by almost 60%. Growing efficiency means that the manufacturing industry produces more in each given working hour, often resulting in products becoming cheaper. Consider electronics, for example, where we saw prices fall for an extended period.
By contrast, construction labour productivity decreased by 25% in the US and by 15% in the EU in the same period. So, more construction workers are now needed for the same output.
