How to measure labor productivity
The level of labor productivity is characterized by two indicators: production output per unit of time (direct indicator) and labor intensity of products (inverse indicator).
Production of products per unit of working time is defined as the ratio of the volume of goods manufactured and cost of working time. It shows what the volume of production in kind or in value, were created by employees per hour, day, week, month.
The inverse indicator - labor intensity - is calculated as the ratio of the cost of working time to the volume of production. It shows how long it took to produce a unit of production.
Depending on what is measured in labor costs, there are several levels of performance. The average hourly production is defined as the ratio of the volume of output to the number of person-hours worked within a specified period of time. This figure reflects the average production worker for 1 hour for all hours worked.
Average daily production is calculated as the ratio of the volume of output to the number of person-hours worked by all workers of the enterprise. This indicator characterizes the degree of productive use of the working day.
Average monthly production is defined as the ratio of the volume of production and the average number of workers. In this case, the average number of labor does not imply labor costs, but its reserves.
Output per worker, i.e. productivity, is defined as the product of the following indicators: the average hourly production, working hours, duration of working period (week, month, quarter) and the share of workers in the total number of industrial production personnel.