productivity

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Productivity

The amount of output per unit of input, such as the quantity of a product produced per hour of capital employed.

Productivity

A measure of the units of benefit for each unit of work. Benefits include results of work such as GDP or revenue, while units of work include capital and labor. Productivity in the United States is measured by the U.S. Department of Labor on a quarterly basis. It is beneficial for both individual companies and economies to have the maximum amount of productivity possible.

productivity

The efficiency with which output is produced by a given set of inputs. Productivity is generally measured by the ratio of output to input. An increase in the ratio indicates an increase in productivity. Conversely, a decrease in the output/input ratio indicates a decline in productivity.

productivity

the relationship between the physical output of a product and the factor inputs which have gone into producing that output. Productivity is usually measured in terms of output per man hour, an improvement in productivity showing up as an increase in output per man hour.

Productivity is important to a firm because it enables the firm to establish a COMPETITIVE ADVANTAGE over rival suppliers: a. given output can be produced at a lower resource cost, enabling a firm to supply this output at a lower price; or alternatively the firm can now produce more output from the same amount of inputs, enabling the firm to increase its total profit return. A high rate of growth of output per man hour also puts the firm in a better position to absorb inflationary cost pressures arising from wage increases and increases in raw material prices, should it be difficult (see PRICES AND INCOMES controls) or competitively inopportune to increase prices on a pro rata basis.

A firm can improve its productivity in a variety of ways, including the adoption of better working practices (particularly the removal of RESTRICTIVE LABOUR PRACTICES) and pay-incentive schemes (for example PROFIT-RELATED PAY and PROFIT-SHARING schemes); the adoption of methods for economizing on the STOCKHOLDING of raw materials (for example the JUST-IN-TIME stock ordering system). An especially important source of productivity improvement is the use of superior production methods (for example switching from labour-intensive BATCH PRODUCTION to continuous capital-intensive MASS-PRODUCTION processes), and investment in the latest ‘state-of-the-art’ technologies (for example COMPUTER-AIDED MANUFACTURING systems (CAM) and COMPUTER-AIDED DESIGN (CAD)). See LEAN MANUFACTURING, ECONOMIC GROWTH, EXPERIENCE CURVE, SPECIALIZATION, HOSHIN.

productivity

the relationship between the OUTPUT of an economic unit and the FACTOR INPUTS that have gone into producing that output. Productivity is usually measured in terms of output per man hour to facilitate interfirm, interindustry and intercountry comparisons. An increase in productivity occurs when output per man hour is raised. The main source of productivity increases is the use of more and better CAPITAL STOCK (see CAPITAL WIDENING and CAPITAL DEEPENING).

This important point can be illustrated in the following three stages:

  1. Suppose, initially, that the assembly of a motor car is a labour-intensive operation: it takes a team of 10 men working with a minimal amount of capital (spanners and screwdrivers only) one whole day to assemble one car;
  2. The firm now invests in hydraulic lifting gear (CAPITAL DEEPENING), and this cuts down considerably the amount of time in aligning parts for assembly, reducing the time it takes to complete the assembly operation to, say, one tenth of a day

    The same team of men is now able to assemble 10 cars a day - its productivity has gone up tenfold;

  3. The firm introduces a continuous-flow assembly line with automatically controlled machines (again, capital deepening), which one man can operate. Output increases to, say, 50 cars a day; the productivity of the remaining man has increased from 1 car a day (a one-tenth part of 10 cars) to 50.

    Just as importantly, 9 men have been ‘released’ from the team. Either they too could all be put to work on a similar automated assembly line (capital widening), in which case the total output of the 10 men is now 500 cars per day (10 x 50), compared to 50 before. Alternatively, they could be redeployed outside the car industry, thereby helping to increase output in other sectors of the economy

    Increased productivity thus makes an important contribution to the achievement of higher rates of ECONOMIC GROWTH.

    See JOB, CAPITAL-OUTPUT RATIO, SPECIALIZATION, QUALITY CONTROL, RESTRICTIVE LABOUR PRACTICE, WORK STUDY, X-INEFFICIENCY, ORGANIZATIONAL SLACK, SUPPLY-SIDE ECONOMICS, COLLECTIVE BARGAINING, NEW AND OLD PARADIGM ECONOMICS.

References in periodicals archive ?
* A significant proportion of Israel's workforce consists of foreign workers, employed at low wages and under inferior working conditions, in many cases as a cheap alternative to investing in mechanization--also auguring low productivity.
Therefore, whether the population decreases or not, areas with low productivity would always provide business opportunities, as the ROI there is very high.
According to estimates provided for the first time in the Kingdom following a recent survey, Saudi Arabia's business sector was losing SR35 billion annually in terms of loyalty due to poor employee performance, low productivity and a lack of interest in work.
The low productivity a only 41.5% of the average in the EU, also reflects on salaries, which are 14 times lower than those in Denmark, for example.
Aljumaili reviewed during the meeting problems of water scarcity and the problems of salinity as well as the low productivity in the agricultural field,.
Summary: BEIRUT: Assad Khoury, president of the banks employees syndicate, said Tuesday that the syndicate has received several complaints over the last six months from employees who say they have been asked to resign due to charges of low productivity. Khoury said that the number of employees who have been directly or indirectly laid off reached 14 to date
However, effective treatment of employees with mental health problems eventually led to productivity improving to near-normal levels after a period of low productivity during treatment.
Almost 90% of cacao plantations in the country are owned by smallholders who have low productivity with quality below international standards.
Abu Dhabi: The low productivity of Arab workers is a myth stemming from imperialism, according to Dr Hessa Lootah, an Associate Professor at the College of Humanities and Social Sciences at the UAE University.
THE VERDICT: Davies is an acclaimed filmmaker (Distant Voices Still Lives, The House of Mirth) as well known for his high art style as his low productivity (his last film was eight years ago).
"It will help provide long-term solutions to a vicious cycle of low productivity, rural hunger and poverty."
Vicious circle of low productivity: It is difficult to offer any precise explanation to low productivity (e.g.

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