Despite an EU-wide 15% increase in output per hour in the EU between 2000 and 2012, Malta has been among the countries with the least increase in productivity, a Eurostat survey showed.

The continuous increase in labour productivity stalled during the economic downturn before picking up again slowly in 2010. Worker productivity in the EU increased steadily between 2000 and 2007. After that until 2009 it stalled at about €31 per hour worked.

The slowdown in productivity during the recession might reflect weak investment under conditions of high economic uncertainty, resulting in slow capital accumulation. Weak productivity could also result from companies retaining labour during the downturn, leading to underuse of labour and spare capacity.

In 2010 labour productivity rebounded and started growing, albeit at a very low rate. In 2012 output per worker increased to €32.2 per hour against the backdrop of falling GDP. During an economic recovery, productivity initially rises as firms increase the work intensity of employees instead of hiring new workers. However, as firms start taking on more workers this boost in productivity is likely to level off.

Although productivity levels grew in all Member States over the past decade, there is still considerable variation in productivity across Europe. In 2012, Luxembourg, Denmark and Ireland had the most efficient workers, producing an output of €58.2, €52.7 and €50.4 per hour respectively. On the other side of the spectrum, labour productivity in 11 Member States was less than €20 per hour. Malta is at around €15 an hour.

The large divergence in productivity rates within the Union has been identified as an important structural weakness and one of the underlying causes of the economic crisis. Internal and external structural adjustment programmes, such as limiting unsustainable residential investments and improving export performance, are taking place in Ireland, Greece, Spain, Cyprus, Portugal and Slovenia.

In these countries wage growth did not match productivity gains before the crisis. These measures are expected to rebalance labour productivity, boost competitiveness and improve economic performance.

Economies in Central and South-Eastern Europe experienced the most pronounced increases in labour productivity between 2000 and 2012: Latvia (107%), Romania (90%), Lithuania (84%), Estonia (60%) and Slovakia (57%).