Study
The European Employers’ Institute (EEI) has released its third and final study on the EU–US labour productivity gap. This study provides an updated assessment of the EU–US labour productivity gap over the period 2019–2024. The findings confirm that the EU’s productivity lag – already structural – has widened sharply in recent years. In 2024, EU hourly labour productivity averaged $72/hour (PPP) compared with $116/hour in the US, a 38% gap visible across all major sectors.
The divergence has accelerated since 2019: US labour productivity grew by +9.7%, while the EU increased by only +2.4%, resulting in a 6.7% deterioration in the EU/US ratio. This widening occurred in three phases: a sharp gap in 2020, temporary stabilisation in 2021 – 2022, and a renewed, broad-based lag in 2023–2024.
The study identifies four key drivers:
- Labour-market responses during the pandemic, with the EU favouring employment preservation and the US allowing stronger adjustment in hours worked.
- The US digital and AI boom, which has significantly boosted value added growth.
- An industrial competitiveness shock in Europe, linked to energy prices, regulatory pressures and intensified Chinese competition.
- Lack of internal competitiveness in the EU relative to the US.
Overall, the 2019–2024 period marks a turning point: the EU’s productivity slowdown has become more pronounced, while the US has strengthened its performance, increasingly driven by high-tech sectors. Europe’s ability to reverse this trend will depend on its capacity to accelerate investment, improve competitiveness, foster innovation and support productivity-enhancing transformation across sectors and member states. Deeper market integration within the EU, in particular for services and capital, is a key lever.
