Labour productivity

Question 1

How do you calculate labour productivity?

Answer 1

output per period / number of employees per period

Question 2

What is the effect of labour productivty on costs?

Answer 2

• labour costs amount to a lot of total costs therefore high labour productivty is key.
• higher productivty = higher efficiency and lower labour costs per unit.
• it’s important to increase output without impacting costs, as it may not be worth it if the business isn’t making enough money to cover the costs.

Question 3

What are the four factors of production?

Answer 3

Capital
Enterprise
Land
Labour

Question 4

What are the influences on labour productivity?

Answer 4

• extent and quality of fixed assets.
• methods of production organisation.
• external factors eg reliability of suppliers.
• skills, ability, and motivation of workforce.
• extent to which the workforce is trained and supported.

Question 5

How can a business increase labour productivity?

Answer 5

• set performance objectives.
• equipment and training.
• streamline production processes.
• working conditions.

Question 6

What problems could there be when trying to improve labour productivity?

Answer 6

• employee resistance.
• lack of quality.
• increase in pay.