How to Calculate Labor Productivity?

Labor productivity

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: 

      Labor Productivity = (Labor output/labor input)   

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.

Example: Assume the following scenario of a production line. 

Total garment production in day =1200 pieces
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
= (1200/37) Pieces 
= 32.4 pieces.

Another productivity measure is labor efficiency. It is the ratio of the time spent working productively to the total time spent at work. These metrics are appropriate for analyzing and comparing the productivity of a particular production line or factory that turns out specific apparel products. However, comparing productivity levels across products or operating lines can be difficult, because the labor productivity benchmarks will vary from one product to another.

The calculation of labor efficiency is shown below. Consider the above data.
  • 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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