Tip 1: How to calculate labor productivity
The actual productivity of existing enterprises is calculated on the basis of the result of monitoring indicators: total labor costs and production volume. To calculate productivity, the actual number of manufactured products (in units or volume terms) divided by the actual total labor costs (man-hours). Thus, the productivity is the reciprocal of the labor intensity. Based on the specifics of the source data, it shows how many products actually produced in this production in actual industrial and economic conditions, per unit of expended production of human labor.
To analyze the development potential and the viability of an enterprise within an industry, economic theory uses indicators such as cash and potential labor productivity.
Cash performance is calculated similarly to the actual, the initial data take the maximum amount produced during the production period with minimal effort, i.e. under conditions when the production works in terms of minimizing and eliminating the overheads and downtime. The purpose of this operation is to calculate the productivity, the maximum achievable in the present economic conditions (existing equipment, raw materials, production organization).
The potential yield, as a logical development of the General idea, considering the conditions of maximum output in the available at this stage of technical development conditions. Assumes the use of the most modern high-tech equipment, the best (possible) of raw materials, etc., respectively, the minimum achievable costs of human labor in the time dimension.