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Why Allianz believes robotics are Europe’s best bet for a productivity comeback
Europe’s productivity engine is faltering, and this is especially visible in manufacturing. Between Q4 2019 and Q1 2024, labor productivity in Eurozone industry rose by only about +0.8%, while US industry improved by roughly +8.8% over the same period. This gap is not new, but it is widening at an alarming pace—and the divergence increasingly looks structural.
Four structural forces behind the lag
Several explanations are often cited together: (i) Digitalization lag — European firms, particularly SMEs, have been slower to adopt digital technologies that drive productivity. (ii) Investment gap — US companies have consistently invested more per worker, especially in high-return areas like automation, while European investment has remained more skewed toward lower-productivity sectors. (iii) Firm demographics — The US economy features a higher share of dynamic, fast-growing, often tech-driven firms, whereas Europe’s firm population tends to be older, smaller, and less prone to scale. (iv) Labor market fragmentation — European labor markets remain more regulated and slower to reallocate workers toward more productive firms, sectors, or regions.
Robotics as an evidence-backed productivity lever
Industrial robots raise output, reduce rework and waste, and allow for continuous operation without proportional increases in labor. Their impact is quantifiable: robots are estimated to have contributed about 5% of productivity growth across 17 OECD economies between 1993 and 2007. More recent firm-level studies also point to productivity gains on the order of about 10% within two years of robot deployment. In Europe’s own factories, the returns are increasingly well documented—and they extend to SMEs. Adopting robots, even in relatively low-tech sectors such as plastics and wood processing, has been associated with marked improvements in labor productivity and product quality. Effects show up at the industry level when deployment reaches sufficient scale. Sector snapshots: In automotive—one of the most robotized industries globally—robot use has been linked to labor productivity growth of up to about 20% over a decade. In metal and machinery manufacturing, where productivity growth has traditionally been slower, robot deployment has been associated with multi-factor productivity improvements of roughly 5–8% across Europe over five-year horizons. European food processors using robotic packaging, inspection, and palletization have achieved on the order of 10–15% increases in output per labor hour, especially where labor shortages had constrained throughput. In logistics and warehousing, service robots for order picking and transport have driven significant labor productivity gains in leading pilot deployments across Germany and the Netherlands.
Beyond factory giants
What makes these patterns compelling is that productivity growth is showing up even in mature industries with relatively low digital intensity. Robots are not only for narrow high-tech verticals—they are increasingly viable for general manufacturing, thanks to falling unit costs and simpler integration. The productivity payoff is no longer limited to the largest factories: it is becoming more accessible to mid-sized firms and regional industrial clusters.