Labour productivity is the value a business adds in goods, services or both and is calculated by the hours or employees required to produce that value. It’s key to determining a company's competitiveness and financial success.
For example, a furniture workshop employs 8 cabinet makers who collectively produce 200 units per month. If output grows to 260 units without adding staff, labour productivity has increased by 30% — a key metric lenders consider when evaluating a manufacturer's operational efficiency.
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