Spain | Construction is facing a productivity problem

Summary

Since 2013, labor productivity in the construction sector, measured as GVA per hour worked in real terms, has fallen by more than 20%. In comparison, the growth in the same indicator for all sectors is 5%.

Key points

• Key points:
• The level is similar to that seen 20 years ago and is closer to the 2007 low than the 1995 high. Given the current shortage of affordable housing in Spain, this trend may be an additional factor placing upward pressure on prices.
• Productivity in the construction sector is traditionally countercyclical. In other words, it increases in times of high job destruction, but declines when there is an expansion, such as now.
• Although temporary employment is lower than in the past, a shortage of workers with specialized training may be dampening productivity. Notably, the construction trade is the sector in which the number of unfilled vacancies has increased the most since 2016 (by 300%).
• An additional consequence of the re-sizing that the sector has undergone has been an aging workforce. While in 2007 almost 30% of employees in construction were under 30 years old (5 pp above the average in other sectors), in 2023 it was only 10% (5 pp below).
• Another factor to take into account is the training of workers. In Spain, almost 70% of those employed in construction do not have a high school education. This percentage has hardly changed over the last 15 years.

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