Theme 1.1 - Labour Productivity Flashcards
What does production involve?
Converting inputs into outputs
What is productivity?
A way of measuring how efficiently a company converts inputs into outputs
How is productivity measured?
Output per unit of input employed
What is the overall productivity ratio?
Output/Input
How can productivity per worker be calculated?
Output/No. of workers
Worker A output/30 days
Why is labour productivity important? (5 Factors)
Economic Growth
Inflation
Rising real Wages
Competition
Benefits to firm
Why is labour productivity important for economic growth?
Improvements enable firms to produce more for lower costs
Profits increase
Why is labour productivity important for inflation?
Improvements help to keep costs + inflation low
Why is labour productivity important for rising real wages?
Workers produce more output for lower cost
Firm profit rises
Firm can afford to sustain higher wage
Why is labour productivity important for international competition?
A nation can export goods for cheaper prices than their competitors
Why is labour productivity important for firms?
Firms may be preferable as they can afford to sell their product cheaper than their competitors
How can you increase labour productivity?
Specialisation
Morale + skills of workforce
Technology
Improving worker conditions
