Labour productivity is important as: labour costs are a significant part of total costs, Business efficiency and profitability link to productivity and Unit cost must be kept low.
Higher Labour productivity = Lower labour costs per unit
Key Factors influencing Labour productivity includes: Extent and quality of fixed assets, Motivation and skill of workforce, Training of workforce and External factors
Labour productivity can be improved by: Measuring performance and setting targets, Investment in capital equipment, Investment in employee training and improving working conditions
Potential problems with increasing labour productivity:
Higher output must still be of the right quality
Potential problems with increasing labour productivity:
Potential for employee resistance (Eg. introduction of new technology)
Potential problems with increasing labour productivity:
Employees may demand higher pay
Productivity is a key part of remaining competitive in modern business
Labour costs remain a significant part of total operating costs (Expenses), particularly for labour intensive operations
Overall Labour productivity is the result of several complex factors, not just how hard employees work.
