Labour productivity

• What is labor productivity?

  Output produced per unit of labor input
• How is labor productivity calculated?

  Output over time divided by number of employees
• If 1,000 units are produced by 20 employees, what is the labor productivity?

  50 units per employee
• What are some methods to increase labor productivity?


  • Introduce machinery capital
  • Invest in employee training
  • Use motivational theories (e.g., Taylorism, Herzberg, Maslow)
  • Adapt management style (e.g., democratic to authoritarian)
• Why is high labor productivity important?

  It increases efficiency and reduces labor costs
• What happens if labor costs per unit fall?

  Costs fall, potentially reducing prices
• How does increased competitiveness affect sales and profit?

  It can lead to increased sales and profit
• What are barriers to increasing labor productivity?

  • Resistance from employees
  • Costs of training and machinery
  • Financial limitations
  • Negative motivational impacts
  • Potential quality issues
• What might happen if employees resist new machinery?

  It could hinder labor productivity improvements
• What is a potential consequence of moving to an authoritarian management style?

  It may impact motivation negatively
• What could be a financial barrier to increasing labor productivity?

  Insufficient finances for training or machinery
• What are the potential knock-on effects of reducing labor costs?

  Increased competitiveness and potential profit growth