Labour productivity
Topic: Human Capital: Education, Health and Demographic Dividend · NCERT: Class 11, Ch 4 "Human Capital Formation in India"
Meaning
Labour productivity is the output produced per worker or per hour worked in a given period. It shows how efficient labour is.
Labour productivity = Total output ÷ Number of workers (or total hours worked)
It rises when workers have better skills, better health, better technology and more capital to work with. Raising labour productivity is the main aim of investment in education, health and training. Higher productivity lets wages and living standards rise.
Example
A garment unit in Tiruppur makes 1,000 shirts a day with 10 workers, so labour productivity is 100 shirts per worker per day. The workers are then trained on new machines, and the same 10 workers make 1,200 shirts. Productivity rises to 120 shirts per worker.
Don't confuse with
- Total output (production): output can rise just because more workers are hired. Labour productivity rises only when each worker, or each hour of work, produces more.
Related concepts
- Human resource
- Human capital
- Skill
- Productivity
- Facilitators of human capital
- Continuous improvement