Businesses in the construction of buildings sector

Data from March 2023

Planned article update: 5 July 2024

Highlights

The construction of buildings sector accounted for 2.5 % of the total employment in the EU in 2020.

The construction of buildings sector accounted for 3.7 % of the total number of enterprises in the EU in 2020.

Sectoral analysis of employment by enterprise size class, construction of buildings (NACE Division 41), EU, 2020
(% share of sectoral total) - Source: Eurostat (sbs_sc_con_r2)

This article presents an overview of statistics for the construction of buildings in the European Union (EU), as covered by NACE Rev. 2 Division 41. It belongs to a set of statistical articles on 'Business economy by sector'.

Building projects typically take much longer from conception to completion than the creation of products in many other sectors, and often involve a large number of subcontracting enterprises with various specializations. Another characteristic of the construction of buildings sector is that this activity is particularly cyclical, influenced by business and consumer confidence, interest rates and government programs; this should be borne in mind when interpreting data that concern recent years which have been affected by the financial and economic crisis.

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Structural profile

The construction of buildings sector is one of the smallest (at the NACE division level) within the EU’s non-financial business economy (Sections B to J and L to N and Division 95). Around 863 000 enterprises operated in the EU’s construction of buildings sector (Division 41) in 2020, accounting for 3.7 % of all enterprises in the non-financial business economy. These enterprises employed over 3.2 million persons, 2.5 % of the employment in non-financial business economy and 25.1 % of the total number of persons employed in construction (Section F). They generated €143.2 billion of value added which was 2.2 % of the non-financial business economy total and 15.8 % of the construction total.

Table 1: Key indicators, construction of buildings (NACE Division 41), EU, 2020 - Source: Eurostat (sbs_na_con_r2)

The apparent labour productivity of the EU’s construction of buildings sector in 2020 was €44 400 per person employed, €6 500 per person less than the non-financial business economy average of €50 900 per person employed, but slightly above the construction average of €42 500 per person employed. Average personnel costs within the EU’s construction of buildings sector were €32 900 per employee, slightly lower than the non-financial business economy average (€36 400 per employee) and the construction average (€36 000 per employee). The EU’s construction of buildings sector recorded a wage-adjusted labour productivity ratio of 134.8 %, below the non-financial business economy average (139.8 %), but well above the construction average (118.2 %). This sector’s gross operating rate (the relation between the gross operating surplus and turnover) of 9.5 % was also below the non-financial business economy average (10.2 %) and below construction average (10.7 %).

Sectoral analysis

The construction of buildings sector is composed of two subsectors: the development of building projects (Group 41.1) and the construction of residential and non-residential buildings (Group 41.2). The development of building projects was the smaller of the two subsectors within the EU according to most measures, with 9.5 % of the sector’s employment and 19.6 % of sectoral value added in 2020 — see Figure 1.

Figure 1: Sectoral analysis of construction of buildings (NACE Division 41), EU, 2020
(% share of sectoral total) - Source: Eurostat (sbs_na_con_r2)

Due to its lower employment share, the EU’s development of building projects subsector had a much higher apparent labour productivity (€91 400 per person employed) than that for the construction of residential and non-residential buildings subsector. In fact, the apparent labour productivity of the development of building projects subsector was by far the highest among all of the NACE groups within the construction sector. A similar situation could be seen for the other indicators shown in Table 2b. In 2020, average personnel costs and wage-adjusted labour productivity were higher for the EU’s development of building projects subsector than for any other NACE group within construction.

Table 2a: Sectoral analysis of key indicators, construction of buildings (NACE Division 41), EU, 2020 - Source: Eurostat (sbs_na_con_r2)

Table 2b: Sectoral analysis of key indicators, construction of buildings (NACE Division 41), EU, 2020 - Source: Eurostat (sbs_na_con_r2)

By contrast, the construction of residential and non-residential buildings recorded an apparent labour productivity of €39 400 per person employed, below the construction average of €42 500 per person employed and average personnel costs of €32 100 per employee that were also below the construction average of €36 000 per employee.

Country overview

As noted above, the construction of buildings sector traditionally displays a strongly cyclical development. Cyprus was the Member State with, in relative terms, the construction of buildings sector with the highest value added in 2020, where 7.8 % of its non-financial business economy value added was generated, followed by Romania (6.7 %), Luxembourg (5.9 %) and Lithuania (5.0 %). The least specialized Member States, in value added terms, were Greece (1.3 % of non-financial business economy value added in the construction of buildings sector), Slovakia (1.4 %), followed by Germany, France and Italy (all three with 1.6 %). For the remaining Member States, the share of the construction of buildings sector in non-financial business economy value added ranged from 1.7 % in Ireland to 4.8 % in Estonia.

Figure 2: Relative importance of construction of buildings (NACE Division 41), 2020
(% share of value added and employment in the non-financial business economy total)
Source: Eurostat (sbs_na_sca_r2)

In 2020, Germany was the largest Member State for the construction of buildings sector in value added terms, with a 19.0 % share of EU value added. Spain showed the largest share of the EU’s employment with 16.0 %.

Figure 3: Concentration of employment, construction of buildings (NACE Division 41), 2020
(cumulative share of the five principal Member States as a % of the EU total)
Source: Eurostat (sbs_na_sca_r2)

Germany recorded the highest level of value added across the EU Member States in both subsectors: construction of residential and non-residential buildings subsector (14.5 %) and development of building projects (4.5 %).

A wage-adjusted labour productivity ratio above 100.0 % was observed in all Member State, except Slovakia (99.6 %), for the construction of buildings sector in 2020, indicating that the average value added generated per person employed was more than average personnel costs. Lowest wage-adjusted labour productivity ratios were 104.1 % in Sweden and 107.3 % in Spain. At the other end of the ranking, the highest wage-adjusted labour productivity ratios were 245.1 % in Malta, followed by 243.8 % in Poland and 233.1 % in Romania. These three Member States, as well as Bulgaria, Denmark, Germany, Ireland, Croatia, Cyprus, Latvia, Lithuania, Luxembourg and Hungary had the wage-adjusted labour productivity ratio for the construction of buildings sector above the average for the non-financial business economy.

Table 4a: Key indicators, construction of buildings (NACE Division 41), EU, 2020 - Source: Eurostat (sbs_na_con_r2)

Table 4b: Key indicators, construction of buildings (NACE Division 41), EU, 2020 - Source: Eurostat (sbs_na_con_r2)

Size class analysis

Figure 4: Relative importance of enterprise size classes, construction of buildings (NACE Division 41), EU, 2020
(% share of sectoral total) - Source: Eurostat (sbs_sc_sca_r2)

The enterprise size structure of the construction of buildings sector is dominated by micro enterprises (employing fewer than 10 persons). Around 93 % of all enterprises were categorized as micro enterprises, they employed 43.9 % of the persons employed in the EU’s construction of buildings sector in 2020 and accounted for 33.5 % of its value added. While the 502 large enterprises (employing 250 or more persons) contributed 11.7 % of the employment, they generated 20.3 % of total value added, and thereby recorded the highest apparent labour productivity (€76 900 per person employed).

Table 5: Key size class indicators, construction of buildings (NACE Division 41), EU, 2020 - Source: Eurostat (sbs_sc_con_r2)

Figure 5: Sectoral analysis of employment by enterprise size class, construction of buildings (NACE Division 41), EU, 2020
(% share of sectoral total) - Source: Eurostat (sbs_sc_con_r2)

Figure 6: Sectoral analysis of value added by enterprise size class, construction of buildings (NACE Division 41), EU, 2020
(% share of sectoral total) - Source: Eurostat (sbs_sc_con_r2)

Micro and small enterprises collectively employed three quarter of the construction of buildings persons in 2020 for EU total and more than half in nearly all of the EU Member States (for which data are available — see Figure 6): the exception were Denmark, France, Austria and Sweden. In these four countries also the share of the persons employed in large enterprises was more than one quarter, while in the rest of the Member States large enterprises accounted for less than a quarter in employment terms. In value added terms, the contribution of large enterprises reached 42.6 % in France, but was less than 10.0 % in Bulgaria, Spain, Italy, Latvia, Lithuania, Portugal and Romania.

Table 6a: Number of persons employed by enterprise size class, construction of buildings (NACE Division 41), 2020 - Source: Eurostat (sbs_sc_con_r2)

Table 6b: Value added by enterprise size class, construction of buildings (NACE Division 41), 2020 - Source: Eurostat (sbs_sc_con_r2)

Data sources

The analysis presented in this article is based on the main dataset for structural business statistics (SBS) and size class data, all of which are published annually.

The main series provides information for each EU Member State as well as a number of non-member countries at a detailed level according to the activity classification NACE. Data are available for a wide range of variables.

In structural business statistics, size classes are generally defined by the number of persons employed. A limited set of the standard structural business statistics variables (for example, the number of enterprises, turnover, persons employed and value added) are analyzed by size class, mostly down to the three-digit (group) level of NACE. The main size classes used in this article for presenting the results are:

small and medium-sized enterprises (SMEs): with 1 to 249 persons employed, further divided into:
- micro enterprises: with less than 10 persons employed;
- small enterprises: with 10 to 49 persons employed;
- medium-sized enterprises: with 50 to 249 persons employed;
large enterprises: with 250 or more persons employed.

Structural business statistics also include regional data. Regional SBS data are available at NUTS levels 1 and 2 for the EU Member States, Iceland and Norway, mostly down to the two-digit (division) level of NACE. The main variable analysed in this article is the number of persons employed. The type of statistical unit used for regional SBS data is normally the local unit, which is an enterprise or part of an enterprise situated in a geographically identified place. Local units are classified into sectors (by NACE) normally according to their own main activity, but in some EU Member States the activity code is assigned on the basis of the principal activity of the enterprise to which the local unit belongs. The main SBS data series are presented at national level only, and for this national data the statistical unit is the enterprise. It is possible for the principal activity of a local unit to differ from that of the enterprise to which it belongs. Hence, national SBS data from the main series are not necessarily directly comparable with national aggregates compiled from regional SBS.

Context

This article presents an overview of statistics for the construction of buildings sector in the EU, as covered by NACE Rev. 2 Division 41. This division includes general construction of buildings of all kinds. It includes new work, repair, additions and alterations, the erection of pre-fabricated buildings or structures on the site and also constructions of a temporary nature. Also included are the construction of entire dwellings, office buildings, stores and other public and utility buildings, farm buildings, and so on.

The development of building projects (residential and non-residential) involves bringing together financial, technical and physical means to achieve the building projects for later sale.

The construction of buildings (residential and non-residential) includes the construction of complete buildings on own account for sale or on a fee or contract basis. Outsourcing parts or even the whole construction process is possible. All types of residential buildings and non-residential buildings are included, such as factories, workshops, assembly plants, warehouses, stores, shopping malls, hotels, restaurants, airport buildings, office buildings, hospitals, schools, religious buildings, indoor sports facilities and parking garages (including underground). Remodeling or renovating existing structures is also included.

This NACE division is composed of two groups:

the development of building projects (Group 41.1);
the construction of residential and non-residential buildings (Group 41.2).

The information that is presented in this article excludes the erection of complete prefabricated constructions from self-manufactured parts not of concrete (these activities form part of the wood and metal manufacturing sectors (Divisions 16 and 25 respectively)), the construction of industrial facilities except buildings (which are included within civil engineering, Division 42). Also excluded are architectural and engineering activities and project management services related to building projects (Division 71).