Business
Labour Productivity
Labour productivity refers to the amount of output produced per unit of labor input. It is a measure of efficiency and is calculated by dividing the total output by the total number of hours worked. Higher labour productivity indicates that a business is producing more goods or services with the same amount of labor, leading to increased profitability and competitiveness.
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10 Key excerpts on "Labour Productivity"
- Stephen Taylor, Graham Perkins(Authors)
- 2021(Publication Date)
- CIPD - Kogan Page(Publisher)
15Productivity
In this chapter we are going to explore Labour Productivity. This is a subject that is likely to become more and more significant for employing organisations in the future, and particularly in the UK where recent years have seen poor performance in this area when seen from a national economic standpoint. We will start by explaining what exactly is meant by the term ‘Labour Productivity’ and summarise some of the debates about why the UK has not been becoming more productive of late. This is by no means something that economists and commentators agree about. It is common for the term ‘productivity puzzle’ to be used to demonstrate how so many very different views are expressed about it. We will go on to consider some of the steps that employing organisations might take to improve their productivity over the longer term.What is Labour Productivity?
The term is best understood by looking at the three ways in which it is most commonly measured at national level:- GDP divided by the total number of people in paid work (output per worker).
- GDP divided by the total number of jobs (output per job).
- GDP divided by the total number of hours that are worked (output per hour worked).
GDP here refers to the standard measure of national income. It is essentially an estimate for the total value of all the goods and services produced in an economy in a set period of time across the economy. So Labour Productivity is a measure of how much of this ‘added value’ is produced by each worker or each job or in each hour worked on average. The third of these three measures (the one derived from hours worked) is generally considered to be the most useful, but the data collected by government statisticians tends to be less accurate because employers do not typically record this information.It is also important to appreciate that these measures are different. A person can work a lot of hours, but not be so productive. A worker can easily improve his or her output by working more hours, but that does not mean they are becoming any more productive. It is only when output improves when hours of work stay the same, or when it stays the same as hours fall, that we can say productivity is improving.
eBook - PDFOperations Management NQF4 SB
TVET FIRST
- S Paarman M Bosman(Author)
- 2013(Publication Date)
- Macmillan(Publisher)
Module 8 productivity: the definition of productivity according to NEDlAC: ‘productivity is the efficiency with which inputs of capital and labour are used’. Words & Terms 163 Module 8: Improving productivity in a structured business environment We also refer to productivity in terms of labour. Labour Productivity is the average product of labour (average output per worker or per worker hour), an output which can be measured in physical terms (unit terms) or price terms. Fig.8.1 Productivity can be measured in hours. Practical use of the elements of productivity There are several important elements of productivity: • effectiveness (doing the right things) • efficiency (doing things the right way) • utilisation (optimum use of resources – human and physical resources) • elimination of all forms of waste. Planning and careful implementation of an operational plan is important for effectiveness, efficiency and careful utilisation of resources. The correct use of equipment and machinery can ensure the optimum use of resources. Fig.8.3 Staff need to know how to operate equipment and machinery effectively. By eliminating waste the inputs are used effectively to ensure that the outputs are produced within the scheduled timeframe. Fig.8.2 Taking longer breaks during working hours is counterproductive. 164 Topic 5: Evaluating business operations Assessment activity 8.1 Work on your own. 1. Complete this activity at home. 2. Invite family members, friends or neighbours for pancakes one morning. 3. Follow the below recipe: Ingredients: 1 cup flour 1 cup milk 2 eggs 2 tsp sugar 1 tsp salt Instructions: Mix eggs, milk, sugar and salt. Add flour while stirring. When your pancake mix is complete, ask a friend to time how long it takes to produce each pancake. Before you begin, try to estimate the time that it will take to produce the pancakes. For the production of one pancake, time the following process: • Melt margarine in the pan.
eBook - PDFSucceed with Productivity and Quality
How to Do Better with Less
- Imre Bernolak(Author)
- 2009(Publication Date)
- ASQ Quality Press(Publisher)
In view of the basic importance of people with regard to productiv- ity both as producers and as consumers, the labor productivity concept has been the preferred expression of productivity for many years. It is a measure of how much of some goods or services of a certain quality are produced per person-year or per person-hour. This relationship, usually expressed as the ratio of output (that means the goods and services produced) per labor input (worker hours or years) shows how well an organization utilizes and converts all of its resources—manpower, materials, equipment, capital, and energy—into outputs, that is, tangible items or services, measured per unit of labor time. Labor productivity = Output (goods or services produced) Labor input (worker hours or years) Although these measures relate output to labor input, they do not measure the specific contribution of labor or any other factor of production. Rather, they reflect the joint effects of a number of interrelated influences, such as technology, capital investment per worker, capacity utilization, level of output, plant layout, managerial and supervisory skills, as well as the skill, interest, and effort of the workforce. The factors of productivity and the means of productivity improvement will be discussed later, but it needs to be emphasized here that productivity improvement is not about making people work harder but rather “smarter” by organizing, motivating, and equipping them with better tools to help them work more efficiently and effectively. As people have realized that productivity is not only affected by labor but also by other factors, they endeavored to find out the relative importance of these factors in order to develop the best combination of all resource inputs toward achieving higher productivity. They have developed “out- put per capital” productivity measures, “output per material” productivity
No longer available |Learn more- (Author)
- 2014(Publication Date)
- College Publishing House(Publisher)
Many economists see the economic expansion of the later 1990s in the United States as being allowed by the increase in worker productivity that occurred during that period. The growth in aggregate supply allowed increases in aggregate demand and decreases in unemployment at the same time that inflation remained stable. Others emphasize drastic changes in patterns of social behaviour resulting from new communication technologies and changed male-female relationships. Labor productivity Labour Productivity is generally speaking held to be the same as the average product of labor (average output per worker or per worker-hour, an output which could be measured in physical terms or in price terms). It is not the same as the marginal product of labor, which refers to the increase in output that results from a corresponding increase in labor input. The qualitative aspects of labor productivity such as creativity, innovation, teamwork, improved quality of work and the effects on other areas in a company are more difficult to measure. Workforce productivity Labour Productivity USA, Japan, FRG ____________________ WORLD TECHNOLOGIES ____________________ Workforce productivity is the amount of goods and services that a worker produces in a given amount of time. It is one of several types of productivity that economists measure. Workforce productivity can be measured for a firm, a process, an industry, or a country. It was originally (and often still is) called labor productivity because it was originally studied only with respect to the work of laborers as opposed to managers or prof-essionals. The OECD defines it as the ratio of a volume measure of output to a volume measure of input. Volume measures of output are normally gross domestic product (GDP) or gross value added (GVA), expressed at constant prices i.e. adjusted for inflation. The three most commonly used measures of input are: hours worked; workforce jobs; and number of people in employment.
No longer available |Learn more- (Author)
- 2014(Publication Date)
- Orange Apple(Publisher)
Many economists see the economic expansion of the later 1990s in the United States as being allowed by the increase in worker productivity that occurred during that period. The growth in aggregate supply allowed increases in aggregate demand and decreases in unemployment at the same time that inflation remained stable. Others emphasize drastic changes in patterns of social behaviour resulting from new communication technologies and changed male-female relationships. ____________________ WORLD TECHNOLOGIES ____________________ Labor productivity Labour Productivity is generally speaking held to be the same as the average product of labor (average output per worker or per worker-hour, an output which could be measured in physical terms or in price terms). It is not the same as the marginal product of labor, which refers to the increase in output that results from a corresponding increase in labor input. The qualitative aspects of labor productivity such as creativity, innovation, teamwork, improved quality of work and the effects on other areas in a company are more difficult to measure. Workforce productivity Labour Productivity USA, Japan, FRG Workforce productivity is the amount of goods and services that a worker produces in a given amount of time. It is one of several types of productivity that economists measure. Workforce productivity can be measured for a firm, a process, an industry, or a country. It was originally (and often still is) called labor productivity because it was originally studied only with respect to the work of laborers as opposed to managers or professionals. ____________________ WORLD TECHNOLOGIES ____________________ The OECD defines it as the ratio of a volume measure of output to a volume measure of input. Volume measures of output are normally gross domestic product (GDP) or gross value added (GVA), expressed at constant prices i.e.
eBook - PDF- Kanta Marwah(Author)
- 1997(Publication Date)
- World Scientific(Publisher)
27 INTERNATIONAL PRODUCTIVITY COMPARISONS (A REVIEW) t Meaning of Productivity According to the Oxford English Dictionary (1971), productivity is equated to productiveness, 1 which, in turn, is defined as ... fruitfulness; abundance or rich-ness in output. Solomon Fabricant, writing in the Encyclopedia of the Social Sci-ences (Fabricant, 1968), states, ... productivity measures the fruitfulness of human labor . . . . In another sense, productivity measures the efficiency with which re-sources as a whole including capital as well as manpower are employed in produc-tion. In these general terms, productivity carries a meaning that is fairly well known, in an intuitive sense, to most people and is, by and large, a good thing, something to be encouraged and desired. There are those, however, who fear productivity to the extent that it might lead to displacement from work. This is the case in which productivity enhancement comes about through technological progress. Nonparametric measurement. Productivity, as I shall use the term in this essay, has a technical meaning that is obviously tied to the dictionary meaning. I shall look at productivity in two ways, nonparametrically and parametrically. In a nonparametric sense, I shall define productivity as some simple ratio, but with common-sense meaning: X/L = labor productivity, where X = output and L = labor input, and X/TF = total factor productivity, where TF = L + (r/w)K, r = capital rental, w = wage rate, and K = capital stock. These two key ratios for labor and for total factor productivity seem to be simple enough, but in careful measurement for quantitative economics each numerator and denominator requires precise specification. If an economic establishment — firm, plant, enterprise — produces a single output, X is best measured as the physical number of units produced in a given + From Proceedings of the National Academy of Sciences, Vol.
eBook - PDF- T Oosthuizen, B Kirsten, I Fourie, T Oosthuizen, B Kirsten, I Fourie(Authors)
- 2014(Publication Date)
- Future Managers(Publisher)
Module 5 Factors that influence productivity After completing this module, you will be able to: • Demonstrate an understanding of the concept ‘productivity’. • Measure total factor productivity. • Measure the quantitative factors that influence productivity and establish their influence. • Measure the qualitative factors that influence productivity and establish their influence. Module 5 102 Introduction Productivity is a buzzword that is often used incorrectly. You may have heard it on the news, read about it in newspapers or magazine articles. • Productivity defines the ratio between the input (resources like people, raw materials, etc.) of an organisation and the output (products or services that are produced). • Productivity measures the output from production processes, per unit of input. • Productivity is typically measured as a ratio of output per labour-hour and input. • Productivity is a measure of economic efficiency that shows how effectively economic inputs are converted into output. Most businesses are interested in the “bottom line” (what profits they make) and so they look at productivity in terms of profitability – how much money is made from the product or service in ratio to the money it cost to produce. While the two concepts are linked, they are not the same. 1. Understanding productivity After completing this subject outcome, you will be able to: • explain the concept ‘productivity’ in terms of the input/output ratio • explain productivity in terms of its core values • explain productivity in terms of its benefits to society, the economy and environment • explain the productivity process in terms of effectiveness, efficiency, utilisation and respect for human dignity • explain the different types of productivity with examples. 1.1 The input/output ratio INPUTS • MATERIALS – good quality and the right quantity when it is needed. • TOOLS – the right tools for the right job, in working order.
eBook - PDFThe Economics of Firm Productivity
Concepts, Tools and Evidence
- Carlo Altomonte, Filippo di Mauro(Authors)
- 2022(Publication Date)
- Cambridge University Press(Publisher)
7 Productivity and the Labour Market 7.1 Introduction In a world of heterogeneous firms, aggregate economic performance is crucially connected with how the factors of production are allocated. We discussed the theory behind this in Chapter 4. And we concentrate here on the labour factor. In traditional specifications of the production function, capital and labour are the two most important production factors of a firm. We discussed in Chapter 6 how an inefficient allocation of credit to firms feeds into bad investment decisions, distorted capital accumulation and poor economic performance in the aggregate. In this chapter, we turn to the role of labour misallocation, defined rather loosely as all situations where the factor labor is not fully exploited in its intrinsic productivity potential. This can come for instance from (i) unproductive firms employing too many people, (ii) productive people being in the wrong jobs, and alike. This has an impact on individual firm productivity as well as of course on its aggregation at sector and country level. We will use variations of the productivity–decomposition formula developed by Foster et al. (2006), which we discussed in detail in Chapter 4. According to those types of decomposition, aggregate productivity growth is the result of a combination of factors: (1) Productivity of individual firms (the within term) (2) Size of firms (the between term) (3) Changes in the market share of the least and most productive firms (the covariance term) (4) Entry of innovative and productive firms (5) Exit of inefficient firms (factors 4 and 5 combine as the net entry term) 106 7.2 Literature Review 107 As with capital misallocation, a distorted distribution of workers across the firms within industries prevents productivity growth. Both the between and covariance terms are affected: firms struggle to grow, and those that do grow are not necessarily the most productive.
eBook - PDF- Hiram Simmons Davis(Author)
- 2016(Publication Date)
• * * In addition to providing a measure of over-all company efficiency, there are at least four other distinct uses to which productivity accounting may be put in the operation of a given business enter-10 Op. cit., Appendix II, Example I. 11 It is sometimes suggested that nonlabor inputs be expressed in terms of labor time by finding out the amount of labor time that had been expended in producing such inputs—for example, the number of man-hours that had been required to produce a given piece of equipment (or that might be required to replace it with equipment producing the same output). Aside from the difficulty of even estimating such embodied labor, this method provides no representation for the nonlabor component of such composite inputs as ma-terials, power, and machinery—the investor input and scarce material resources that were required for their production. Hence it is inadequate for measuring productivity, although it is useful for analyzing vertical changes in labor requirements of a group of supplier-user related industries. See Productivity and Employment in Selected Industries: Beet Sugar; Brick and Tile; WPA, National Research Project, in co-operation with the National Bureau of Economic Research, 1938, 1939. 90 PRODUCTIVITY ACCOUNTING prise. These are: (1) running an analytical audit of past per-formances; (2) controlling current and near future performance through combining with budget control; (3) preparing common-price financial statements; and (4) finding out who has initially benefited and to what extent from any gain achieved in productivity. All of these uses, except the last enumerated, are considered in this chapter. The analysis of the distribution of productivity gains and losses forms the subject of the chapter immediately following. ANALYTICAL AUDIT The usual audit consists simply of going back over the records of a given accounting period to verify that the accounts as stated are correct according to accepted procedures.
eBook - PDFThe New Economy in Development
ICT Challenges and Opportunities
- A. D'Costa(Author)
- 2006(Publication Date)
- Palgrave Macmillan(Publisher)
Today we have e-business transactions between ‘brick’ firms, ‘click’ firms and ‘brick and click’ firms. The measurement challenge here is to account for the increased volumes in transactions, to identify the business players and their roles and their respective industries and to avoid double counting the value of related transactions. While comprehensive measures of e-business may be useful to profile all of these transactions, such detailed business statistics coverage would be unprecedented if not unrealistic. 2.4 Input measurements in services In this section the specific components of productivity inputs are discussed: labour, capital and intermediates. 28 The New Economy in Development 2.4.1 Labour force (L) measurements in services The measure of labour used in the estimation of productivity is generally quantified in terms of either total hours worked (H) of all employed (E), if one wants to measure output (Y) per hour worked; or total number of employed persons (E), if one wants to measure output per person employed: Output per hour worked (LPH) Y / (E * H) Output per employed (LPE) Y / E This methodology for valuing labour in productivity measurement is not adequate to capture the particular characteristics of labour in the service sector; therefore productivity indicators for services are often miscalculated. 2.4.1.1 The impact of the ICT revolution on patterns of work The ICT revolution in digital technology has increased opportunities for new such ways of working, particularly in knowledge-intensive business services (KIBS), which account for about one-third of the workforce. It is well known that many service employees are working more hours than are documented in the official numbers. It can be argued that actual ‘hours worked’ should include work performed after hours – work at home, work during travel as well as usage of cell phone for working activity – all of which are activities directly associated with work.
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