![Productivity - GDP per hour worked in OECD](https://upload.wikimedia.org/wikipedia/commons/2/2e/Productivity_-_GDP_per_hour_worked_in_OECD.svg)
Workforce productivity is the amount of
goods
In economics, goods are items that satisfy human wants
and provide utility, for example, to a consumer making a purchase of a satisfying product. A common distinction is made between goods which are transferable, and services, which are not t ...
and
services
Service may refer to:
Activities
* Administrative service, a required part of the workload of university faculty
* Civil service, the body of employees of a government
* Community service, volunteer service for the benefit of a community or a p ...
that a group of
workers
The workforce or labour force is a concept referring to the pool of human beings either in employment or in unemployment. It is generally used to describe those working for a single company or industry, but can also apply to a geographic reg ...
produce in a given amount of time. It is one of several types of
productivity
Productivity is the efficiency of production of goods or services expressed by some measure. Measurements of productivity are often expressed as a ratio of an aggregate output to a single input or an aggregate input used in a production proces ...
that
economists
An economist is a professional and practitioner in the social science discipline of economics.
The individual may also study, develop, and apply theories and concepts from economics and write about economic policy. Within this field there are ...
measure. Workforce productivity, often referred to as labor productivity, is a measure for an organisation or company, a process, an industry, or a country.
Workforce productivity is to be distinguished from
employee productivity
Employment is a relationship between two parties regulating the provision of paid labour services. Usually based on a contract, one party, the employer, which might be a corporation, a not-for-profit organization, a co-operative, or any othe ...
which is a measure employed at ''individual level'' based on the assumption that the overall productivity can be broken down to increasingly smaller units until, ultimately, to the individual employee, in order be used for example for the purpose of allocating a benefit or sanction based on individual performance (see also:
Vitality curve
A vitality curve is a performance management practice that calls for individuals to be ranked or rated against their coworkers. It is also called stack ranking, forced ranking, and rank and yank. Pioneered by GE's Jack Welch in the 1980s, it has r ...
).
In 2002, the
OECD
The Organisation for Economic Co-operation and Development (OECD; french: Organisation de coopération et de développement économiques, ''OCDE'') is an intergovernmental organisation with 38 member countries, founded in 1961 to stimulate e ...
defined it as "the ratio of a volume measure of output to a volume measure of input". Volume measures of output are normally
gross domestic product
Gross domestic product (GDP) is a monetary measure of the market value of all the final goods and services produced and sold (not resold) in a specific time period by countries. Due to its complex and subjective nature this measure is oft ...
(GDP) or
gross value added
In economics, gross value added (GVA) is the measure of the value of goods and services produced in an area, industry or sector of an economy. "Gross value added is the value of output minus the value of intermediate consumption; it is a measure o ...
(GVA), expressed at constant prices i.e. adjusted for
inflation
In economics, inflation is an increase in the general price level of goods and services in an economy. When the general price level rises, each unit of currency buys fewer goods and services; consequently, inflation corresponds to a reduct ...
. The three most commonly used measures of input are:
# hours worked, typically from the OECD Annual National Accounts database
# workforce jobs; and
# number of people in employment.
Measurement
Workforce productivity can be measured in two ways, in physical terms or in price terms.
* the intensity of labour-effort, and the quality of labour effort generally.
* the creative activity involved in producing technical innovations.
* the relative efficiency gains resulting from different systems of management, organization, co-ordination or engineering.
* the productive effects of some forms of labour on other forms of labour.
These aspects of productivity refer to the ''qualitative'' dimensions of labour input. If an organization is using labour much more intensely, one can assume it's due to greater labour productivity, since the output per labour-effort may be the same. This insight becomes particularly important when a large part of what is produced in an economy consists of services. Management may be very preoccupied with the productivity of employees, but the productivity gains of management itself is very difficult to prove. While labor productivity growth has been seen as a useful barometer of the U.S. economy’s performance, recent research has examined why U.S. labor productivity rose during the recent downturn of 2008–2009, when U.S. gross domestic product plummeted.
The validity of international comparisons of labour productivity can be limited by a number of measurement issues. The comparability of output measures can be negatively affected by the use of different valuations, which define the inclusion of taxes, margins, and costs, or different deflation indexes, which turn current output into constant output. Labor input can be biased by different methods used to estimate average hours or different methodologies used to estimate employed persons. In addition, for level comparisons of labor productivity, output needs to be converted into a common currency. The preferred conversion factors are
Purchasing Power Parities, but their accuracy can be negatively influenced by the limited representativeness of the goods and services compared and different aggregation methods.
[International Labor Comparisons Progra]
International comparisons of GDP per capita and per employed person
Bureau of Labor Statistics To facilitate international comparisons of labor productivity, a number of organizations, such as the
OECD
The Organisation for Economic Co-operation and Development (OECD; french: Organisation de coopération et de développement économiques, ''OCDE'') is an intergovernmental organisation with 38 member countries, founded in 1961 to stimulate e ...
, th
Groningen Growth Centre International Labor Comparisons Program, and The Conference Board, prepare productivity data adjusted specifically to enhance the data’s international comparability.
Factors of labour productivity and quality
![US productivity and earnings](https://upload.wikimedia.org/wikipedia/commons/f/f0/US_productivity_and_earnings.jpg)
In a survey of manufacturing growth and performance in Britain and Mauritius, it was found that:
"The factors affecting labour productivity or the performance of individual work roles are of broadly the same type as those that affect the performance of manufacturing firms as a whole. They include: (1) physical-organic, location, and technological factors; (2) cultural belief-value and individual attitudinal, motivational and behavioural factors; (3) international influences – e.g. levels of innovativeness and efficiency on the part of the owners and managers of inward investing foreign companies; (4) managerial-organizational and wider economic and political-legal environments; (5) levels of flexibility in internal labour markets and the organization of work activities – e.g. the presence or absence of traditional craft demarcation lines and barriers to occupational entry; and (6) individual rewards and payment systems, and the effectiveness of personnel managers and others in recruiting, training, communicating with, and performance-motivating employees on the basis of pay and other incentives."[''Manufacturing In Britain: A Survey Of Factors Affecting Growth & Performance'', ISR/Google Books, revised 3rd edition. 2003, page 58.]
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It was further found that:
"The emergence of computers has been noted as a significant factor in increasing labor productivity in the late 1990s, by some, and as an insignificant factor by others, such as R.J. Gordon. Although computers have existed for most of the 20th century, some economic researchers have noted a lag in productivity growth caused by computers that didn't come until the late 1990s."
See also
*
List of countries by labour productivity
The following list of countries by labour productivity ranks countries by their labour productivity (also called workforce productivity). Labour productivity is the gross domestic product generated per hour of working time.
List
Different count ...
*
Overall labor effectiveness
Overall labor effectiveness (OLE) is a key performance indicator (KPI) that measures the utilization, performance, and quality of the workforce and its impact on productivity.
Similar to overall equipment effectiveness (OEE), OLE measures avail ...
*
Personal income in the United States
Personal income is an individual's total earnings from wages, investment interest, and other sources. The Bureau of Labor Statistics reported a median weekly personal income of $1,037 for full-time workers in Q1 2022. For the year 2020, the U. ...
References
External links
*
Figures for the US from BLS
{{Authority control
Labour economics indices
Productivity
Productivity is the efficiency of production of goods or services expressed by some measure. Measurements of productivity are often expressed as a ratio of an aggregate output to a single input or an aggregate input used in a production proces ...
Industrial and organizational psychology
Performance psychology