Productivity development in the construction industry and human capital: a literature review

TL;DR

This literature review examines how human capital, management practices, and demographic changes influence productivity growth in the construction industry, highlighting the importance of skills and management quality.

Contribution

It synthesizes existing research on the impact of human capital and management on productivity, emphasizing demographic challenges and skills shortages in construction.

Findings

Management practices are more structured and data-driven.

Higher management quality correlates with better firm performance.

Demographic changes are leading to a shortage of skilled labor.

Abstract

Tis paper is a literature review focusing on human capital, skills of employees, demographic change, management, training and their impact on productivity growth. Intrafirm behaviour has been recognized as a potentially important driver for productivity. Results from surveys show that management practices have become more structured, in the sense of involving more data collection and analysis. Furthermore, a strong positive correlation between the measured management quality and firm performance can be observed. Studies suggest that there is a positive association between management score and productivity growth. The lack or low level of employees' skills and qualifications might be in different ways a possible explanation for the observed slowdown of productivity growth. The main reason for the decline in skilled labor is the demographic change. Construction sectors are increasingly affected by demographic developments. Labour reserves in construction are largely exhausted. Shortage of qualified workforce is impacting project cost, schedules and quality.