productivity


Also found in: Dictionary, Thesaurus, Medical, Legal, Encyclopedia, Wikipedia.

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 ?
In 2018, the UK government required LEPs to create Local Industrial Strategies that clearly defined priorities for how cities, towns and rural areas will maximise their contribution to UK productivity. Until now, there has been a lack of appropriate data on productivity differences across the country.
"Advanced AI technologies increase ROI and attracts new investments while boosting productivity and facilitating procedures.
find out the perceptions of teachers about their research productivity.
A major focus of the productivity debate in Canada has been comparisons with the United States.
None of these arguments have thus far resolved the productivity puzzle.
Investing in employee benefits, technology and equipment and workplace culture were the measures most likely to improve productivity in Wales.
'The ultimate goal of productivity improvement as a driving force of economic development is to enhance the quality of life through creativity, innovation, wealth creation, employment generation and poverty reduction.
"New innovative analysis suggests that this lower level of productivity was evident across all industries, although the size of the gap varies considerably."
Multifactor productivity is calculated by dividing an index of real output by an index of combined units of labor input and capital services.
Toh and Thangavelu present findings from research by the Singapore Productivity Centre on key issues of productivity in the city's retail and food and beverage businesses.
The celebration is led by the Philippine Council for Productivity (PCP), which is chaired by the National Economic and Development Authority (NEDA), the country's social and economic development planning and policy coordinating body, assisted by the Development Academy of the Philippines (DAP), a government think tank and capacity-building institution that provides quality service in the public and private sectors through education, training, and research.
Agricultural productivity is regions dependent demanding further investigation.

Full browser ?