Productivity in the construction industry
Construction is an important industry in Australia, with sales accounting for $327 billion or
some 21 per cent of GDP and its contribution to value added being 7.6 per cent of GDP.
Australian Bureau of Statistics (ABS) data allow us to examine and estimate the productivity
magnitudes involved in this industry and its components; building construction, heavy and
civil engineering construction and construction services. These components account for 35,
23 and 43 per cent of the industry respectively.
The word productivity is often used loosely in ordinary language – here we use it strictly as a
quantitative relationship between industry output and the labour and capital inputs. As a
measure of output, we use the ‘value added’ created by the industry. In the case of labour
inputs, the best measure is hours worked – however, for some purposes we are forced to
use simple head counts. Productivity of Australian labour is critically important, being one of
the drivers of living standards in the long run.
Generally we find that construction is a productive industry with a value added per worker
above the average of all industries and well above the average, if extremely productive
industries such as mining are excluded. Some parts of construction such as heavy and civil
engineering are very productive, generating productivity 53 per cent higher than the Australian average.