calculate labour productivity

What is Labour Productivity?

Labour productivity measures how efficiently workers turn inputs (labour hours) into outputs (products or services). It’s like checking how many cookies a baker can bake per hour.

• Think of a factory line: the faster the line moves, the higher the productivity.
• Higher productivity means more output for the same amount of work.
• It’s a key indicator of a company’s competitiveness.

Formula

Labour productivity is calculated using the formula:

$$Labour\ Productivity = \frac{Total\ Output}{Total\ Labour}$$

Where:

• Total Output – the quantity of goods/services produced.
• Total Labour – the total hours worked by all employees.

Example Calculation

Suppose a bakery produced 200 loaves of bread in 20 hours of labour.

Step‑by‑Step Example

1. Identify the total output (e.g., 200 loaves).
2. Determine the total labour hours (e.g., 20 hours).
3. Divide output by labour: 200 ÷ 20 = 10.
4. Interpret the result: The bakery produces 10 loaves per hour of labour.

Analogy: Production Line as a Race 🚀

Imagine a relay race where each runner (worker) passes the baton (product). The faster the baton reaches the finish line (output), the higher the team’s productivity. If the baton takes longer, productivity drops.

Exam Tips 📋

Quick Practice Questions 🧮

1. A factory produced 500 widgets in 25 hours. What is its labour productivity?
2. If a team’s productivity increases from 8 units/hour to 10 units/hour, what is the percentage increase?
3. Explain why a company might want to increase labour productivity.