In this study we compare the evolution of labour productivity across the majority of EU

member countries over the span of 1995-2016. Productivity growth combined with cross-sectoral

employment shifts from manufacturing industries towards the service sectors can be observed

in all countries. A shift-share analysis suggests that throughout this period most of the labour

productivity growth was due to productivity gains within sectors. Labour movements between

sectors, on the other hand, had small and often negative impact on labour productivity growth,

especially in older EU member countries. Furthermore, the role of sectoral R&D, as one channel

affecting productivity and employment is examined. We find considerable heterogeneity across

sectors of the correlation between R&D expenditure and employment, but several patterns can

be identified. Employment in high-tech sectors both in manufacturing and service exhibits a

positive, significant correlation with R&D expenditure, while for low- and medium-tech manufacturing results are predominantly negative but sensitive to dividing the sample into subgroups

of countries. There is no significant correlation between R&D expenditure and employment in

low-tech service sectors.