Labour productivity trends for the UK construction sector

Labour productivity remains the most widely used measure of economic efficiency yet it has serious theoretical and practical difficulties particularly in the case of construction. This paper will address these problems and suggest approaches to overcome them. The model is illustrated by a case study of the UK construction sector over the period 1948 to 1995. The paper commences with a brief discussion of construction productivity. From this the theoretical problems are identified and analyzed. This is set in the context of the UK construction sector and the practical difficulties detailed. The first set of difficulties are concerned with the operation of subcontracting and specifically labour-only subcontracting. The incidence of self-employment in construction creates major problems for data collection. Labour productivity requires an estimate of the numbers employed in construction; identification of those notionally 'self-employed' gives some problems. The second set of practical difficulties relates to the issue of off-site prefabrication. This involves activities being shifted from the site to the factory. Given the way that official statistics are collected, these activities shift from construction to manufacturing. As more tasks are carried out off-site, construction productivity risks being trivialized out of existence. Solutions are proposed for these problems. The approach rests on considering the construction 'product' rather than the 'process'. Thus all labour involved with construction including off-site prefabrication and materials manufacture will be estimated. The Leontief 'input-output' approach is used to synthesize the direct inputs and outputs to and from construction to give total inputs and outputs. The model is applied to the UK construction sector over the post war period. The main results are analyzed.