Productivity Wars: Europe vs. The USA

Updated: February 07, 2011

For a long time, Europeans consistently out-produced workers in the US, but for more than a decade, Europe has failed to keep up the pace, posting smaller productivity gains almost every year for more than a decade.

Key data show that the disparity in productivity results at least partially from fewer hours worked by European workers. As recently as 2007, Americans worked five weeks longer than their counterparts in Europe, spending about 180 more hours on the job.

Although European manufacturing is keeping pace with that in the US, the European services sector is noticeably lagging, representing the bulk of the disparity in productivity.

Demographic differences such as the number of females and seniors in the work force and more spending on research and development in the US are other factors that help explain why Europe is having trouble keeping up.

To enhance competitiveness, Europeans are looking for ways to address the factors that are limiting productivity growth compared to the US in hopes of resuming leadership in that category and for becoming more competitive in the global marketplace.

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