The latest European Employers’ Institute study titled ‘Understanding the EU-US labour productivity gap: #3—The amplified divergence (20192024)’ updates the picture of the labour productivity gap between the US and the EU, highlighting why the gap exists, how it differs across countries, and the main factors behind it. It is the third in a series of three focusing on the comparative analysis of labour productivity in the EU and the US.
A new study by the European Employers’ Institute (EEI), conducted by Rexecode, finds that the EU–US labour productivity gap has widened significantly since 2019.
In 2024, EU hourly labour productivity reached $72/hour (PPP) compared with $116/hour in the United States – a 38% gap. Over 2019–2024, US productivity grew by +9.7%, while the EU recorded only +2.4%, deepening the gap by 6.7%.
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.
The report highlights four main drivers of this pronounced lag: the EU’s employment-preservation approach during the pandemic, the US digital and AI investment boom, Europe’s industrial competitiveness shock (energy, regulation, China), and weaker private demand and investment.
“The message is clear: Europe must remove barriers to competitiveness and step up investment if it wants to close the gap,” said Delphine Rudelli, Chair of the Board of EEI and Director General of Ceemet. “Productivity must return to the centre of the EU’s growth strategy.”
The study warns that the EU now faces both structural and cyclical disadvantages, while the US benefits from a strong technology-driven rebound.
The study, along with more information on the EEI work, is available on the European Employers’ Institute website.
The European Employers Institute (EEI) is a research institute, founded by European and national employer organisations in March 2024. The EEI focuses on emerging employment and social policy topics at the European level, producing research studies, analyses and publications. It aims to ensure balanced representation on employment issues and strengthen social dialogue at the European level.
For more information:
Delphine Rudelli: info@eei-institute.eu / + 33 6 87 71 51 12