4.1.1 Production Processes: Labour Productivity

Objective: Calculate Labour Productivity

Labour productivity is a key measure of how efficiently a business uses its workforce. It indicates the amount of output produced for each worker. Understanding and calculating labour productivity helps businesses to assess their operational efficiency and identify areas for improvement.

Calculating Labour Productivity

Labour productivity is calculated using the following formula:

Labour Productivity = $$ \frac{Total Output}{Number of Workers}

Where:

• Total Output: The total quantity of goods or services produced during a specific period (e.g., a day, a week, a month).
• Number of Workers: The number of employees directly involved in the production process during the same period.

Example Calculation

A factory produces 1200 units of a product in a week. There are 20 workers employed in the production process during that week.

Labour Productivity = $$ \frac{1200}{20} = 60 units per worker per week.

This means that each worker is producing 60 units of the product each week.

Table Summary

Component	Definition
Total Output	The total quantity of goods or services produced.
Number of Workers	The number of employees directly involved in production.
Labour Productivity	The amount of output produced per worker.

Factors Affecting Labour Productivity

Several factors can influence a business's labour productivity:

• Training and Skills: Well-trained and skilled workers are generally more productive.
• Technology: The use of modern technology and machinery can increase output per worker.
• Motivation: Motivated employees are more likely to be productive.
• Working Conditions: Safe and comfortable working conditions can improve productivity.
• Management Practices: Effective management can optimize workflows and improve efficiency.