Why construction productivity has been falling since 1970 and why new tools do not fix it. Project-level regulation makes projects smaller, smaller projects make firms smaller, and small firms do not invest in technology: in 2023 only 24% of construction firms introduced anything new, against 32% on average in the EU.
Frequently asked questions
Why has construction-sector productivity been falling since 1970?+
Construction is the only major sector where a worker produces less today than half a century ago. Between 1935 and 1970 the number of homes per construction worker often grew faster than cars per worker; then the curve reversed. By 2020 construction's labour productivity and total factor productivity were below their 1950 levels, while the economy as a whole stood 290% and 230% higher respectively.
Does new technology solve the productivity problem in construction?+
Not on its own. The explanation with the strongest research support is not about tools or craftsmanship but structure: project-based regulation shrinks projects, smaller projects shrink firms, and small firms do not invest in technology. Without addressing that structure, new tools have no effect.
What role does regulation play in construction's low productivity?+
A central one. Because each job is regulated as a separate project, you get smaller projects and therefore smaller firms. Small firms lack the scale to invest in automation, prefabrication or digitisation — precisely the investments that would raise productivity.
Why do construction firms invest less in innovation than other sectors?+
According to the European Investment Bank's investment survey, in 2023 only 24% of construction firms introduced something new, against 32% on average in the EU. The fragmentation into small, project-based firms explains the gap: too little continuity and scale for innovation to pay off.
What does the recent European attention to construction mean?+
In December 2025 the European Commission turned this diagnosis into policy for the first time. That shifts the conversation from "which tool do we buy" to "which structure keeps the sector small", and opens the door to measures that reward scale and innovation in construction.