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Labour Productivity in Business

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Labour productivity is pivotal in determining a business's efficiency and profitability. It's calculated by output over employee count, affecting costs and competitiveness. Technological advancements and employee training can significantly improve productivity, while managing labour costs per unit is crucial for market positioning.

Exploring the Role of Labour in Business

Labour, within the context of business, encompasses the collective efforts of employees, involving both physical and mental work, to produce goods or provide services. It is a critical component of a company's operations and often constitutes one of the largest expenses. Effective management of labour involves understanding its dynamics and measuring productivity, which is the output generated by the workforce over a given period. Labour productivity is a key performance indicator, as it affects the company's profitability by influencing the cost of producing goods or services.
Diverse team of workers in safety gear operates advanced machinery on a clean, well-lit industrial factory floor with large windows and blue sky outside.

Calculating Labour Productivity

Labour productivity is determined by the ratio of output to the number of employees contributing to that output. It can be measured over various time frames, such as hourly or annually, to suit the nature of the business's operations. The general formula for labour productivity is the total output divided by the total number of employees during the measurement period. For instance, if a factory produces 20,000 widgets in a month with 50 workers, the labour productivity is 400 widgets per worker per month. This metric is essential for assessing the efficiency and cost-effectiveness of the workforce.

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00

In a business setting, ______ includes the combined physical and mental efforts of workers to create products or offer services.

Labour

01

______ productivity, which measures the output produced by employees in a certain timeframe, is vital for a company's ______.

Labour

profitability

02

Labour Productivity Measurement Time Frames

Measured hourly or annually to match business operations.

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