Labor productivity measures the efficiency of employee performance by relating the output of goods and services to the amount of labor input within a specific time period. It is calculated as the ratio of output produced (e.g., number of units, value-added) to the labor expended, taking into account both quantity (hours worked) and quality (skills and effort) of labor.
As a key performance indicator, labor productivity plays a central role in assessing a company’s operational efficiency, competitiveness, and contribution to economic growth. It is also closely tied to broader macroeconomic indicators such as GDP per capita and is often used in productivity analyses and efficiency benchmarking.
Higher labor productivity can result from improvements in:
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Employee qualification and training
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Technological innovation
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Process optimization
Sustained productivity gains not only boost corporate profitability but also contribute to national wealth and living standards.
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