Productivity

Productivity is a measure that describes improvement and increased efficiency within the organization.

This index reflects the ratio between the value of production (total output multiplied by sale price) and the cost of employee wages. Wage costs include the total cost of the various payments made by the organization to employees (workers’ wages, social benefits). Production value is calculated the same way as the productivity index, and the only input is the cost of the workers’ wages. Labor productivity expresses the monetary value obtained in terms of output for every $1 paid by the organization in wages. For example, the meaning of a labor productivity of 1.5 is that the value of output produced by workers is 50% higher than the cost of wages.