Labour Productivity

• The amount of output produced per unit of labour input

  Essential for businesses in terms of efficiency competitiveness and profitability
• Why does labour productivity matter?

  • Labour costs are usually a significant part of total costs
  • Business efficiency and profitability are closely linked to productive use of labour
  • In order to remain competitive a business needs to keep its unit costs down
• Factors that impact labour productivity?


  Training, technology, motivation, working conditions
• Whats the formula?


  output per period in units / number of employees at work = output per employee in units
• Ways to improve labour productivity?


  invest in capital equipment, improve training, improve working conditions and streamline production processes
• Problems with labour productivity?


  potential trade off with quality, potential for employee resistance, employees may demand higher pay for more work