What is Labor Productivity?
In the context of manufacturing productivity is defined as the ratio of output and input in the production process. When the output rate of a production process is measured against the total labor input, it gives labor productivity. In this post, I will show the labor production calculation method and its formula.
Labor productivity calculation Formula:
In an apparel manufacturing factory, industrial engineers, factory managers, and line supervisors measure the number of garments produced by a line of sewing machine operators in a specific time frame. Generally, the factory works 8 to 10 hours a day. The total production (output pieces) from a production line and the total labor involved in producing those pieces are required to calculate labor productivity.
Total labor (sewing operators and helpers) involved in making those garments = 37
Shift Time in Minutes = 600 minutes (10 hours)
Labor productivity =(Total pieces produced/ Total labor input) per 10 hours
- SAM (Standard allowed minutes) of the garment = 8.9
- Minutes produced by each labor : (32.4 pieces X 8.9) = 288 minutes
- Available time: 600 minutes per shift
So, Labor efficiency = (Produced minutes/available minutes) = (288/600*100)% = 48%
To compare productivity estimates across products, factories, or even industries, economists define labor productivity as the production value added each worker generates. In this case, labor productivity equals the value of production divided by labor input. The production value is generally measured as value-added, equal to the gross value of sales minus the value of purchased inputs such as fabric, trim, and energy. Labor input is measured by total work hours. Labor productivity can thus be estimated at the national, and aggregate level and for specific industries in an economy.
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