• It is output per labour hour. That is, it is output per worker in an hour.
  • It is output per a unit of factor of production employed in a given period.
  • It is output per a unit of input employed. Briefly, . it is “output per factor input”.

The definition implies what labour, a worker, is capable of producing per period expressed . in terms of an hour. Labour productivity increase if his output per hour rises. Efforts made to increase labour’ productivity is geared towards increasing ‘his output per hour. And “increased labour productivity” refers to “increased output per labour hour”. It leads to a rise in output and a fall in level of prices.

Note: If labour productivity increases, the number of labour (worker) required to perform the same amount of work decreases, and vice versa.


Productivity concepts:

  • Total productivity.
  • Average productivity.
  • Marginal productivity.


  1. Total Productivity: It is the sum of productivity of the factors of production: Land, Capital, Labour and Entrepreneur in a given period. That is, it is the sum of output of all factor inputs employed in a given period. Total productivity is also referred to as “Total Factor” Productivity.
  2. Average Productivity: It is output per a unit of input employed in a given period. In other words, it is the “total output of goods (total factor productivity) divided by total units of factor input.
  3. Marginal Productivity: It is the additional output arising from one extra input employed (used) ina given period. It is often expressed as “Marginal Revenue Product (MRP)” in terms of value (money), and as “Marginal Physical Product (MPP)” in terms of a unit of goods. That is, labour marginal productivity expressed in terms of money is called “MRP of labour” and in terms of unit goods is “MPP of labour”.


Factors influencing labour productivity

The following are the major factors influencing labour productivity:

  1. Availability of capital goods: The use of appropriate and adequate physical capital goods like machines by labour increases labour productivity. For example, the use of tractors, cultivators, harvesters and other agricultural inputs like fertilizers, improved seedling, etc. in farming greatly increases labour productivity.
  2. Increase in capital investment: An increase in the purchases of capital goods and their effective use in a country raise a country’s total productivity.
  3. Availability of industrial/ office equipment: Access to and use of important equipment like word processors, appropriate and reliable tools, computers, electronic calculators/adding machines, etc greatly raise labour productivity in the service industry.
  4. Availability of training facilities: Availability of well equipped colleges and universities that ensures effective teaching coupled with on-the job training programme for workers, workshops for applicants and disabled people to receive appropriate training, like technical skills, raise output per labour hour in a country.
  5. Availability of social infrastructure: Availability of social amenities, like constant supply of electricity and pipe-borne water, good network of roads, well-equipped hospital, good drainage system and sewage and refuse disposal services greatly enhance labour productivity.
  6. Efficient management: Efficient management of an enterprise or a state leads to increased labour productivity as it ensures efficient production system, good co-ordination, effective marketing, proper control of finance and resources, etc.
  7. Conducive environment: A well-ventilated and clean offices with air-conditioners and suitable furniture raise the level of concentration of workers and a rise in output per labour hour.
  8. High level of discipline: Decent attitude (good behaviour) and a high level of discipline of workers lead to constant punctuality, transparent honesty, unflinching co-operation, etc. They influence (increase) productivity growth rate.
  9. Political stability: Political stability and industrial harmony (complete absence of disturbances) are essential for orderly functioning of firms. They lead to constant rise in total output and labour productivity.

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