Infrastructure: Government investments could drive up prices in the construction industry
Labor productivity in the German construction industry is almost 30 percent lower than the 2010 level, according to DIW. Now the industry must expand its capacities.
Berlin authorities warn that state investments in the construction sector could lead to higher prices due to insufficient productivity gains. A study by the German Institute for Economic Research (DIW Berlin) for the Bertelsmann Foundation indicates that expanding the construction industry's capacity is crucial to prevent public infrastructure investments from driving up prices.
Study author Martin Gornig states that the construction sector must overcome a productivity decline trend that has been ongoing for several years. As of 2025, the industry's productivity level is nearly 30% lower than in 2010, a negative trend that has intensified since the COVID-19 pandemic and the Russia-Ukraine conflict. A simulation using company data suggests that the construction output could be 12% higher if less productive companies improved their performance, which would be equivalent to the output of approximately 350,000 additional employees.
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