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# How to calculate productivity of labor

Updated March 23, 2017

Labor productivity is an economic measurement used to determine the health of a country's economy. Specifically, it describes the amount of output that is generated per worker each hour. The more output produced per hour of work, the greater the level of productivity. Productivity increases are generally accepted as a sign that the economy is expanding. Technological advances and increased worker efficiency are the two primary sources of productivity improvements.

Determine the total worker output within a given period of time. The total output can be expressed in terms of monetary value, or it can be expressed in terms of units produced.

Determine the total number of man hours that were dedicated to production within the same period of time. The total number of man hours should include not only the hours dedicated to the manufacturing process but the management and oversight process as well.

Divide the total output by the total number of man hours. The result of the division will be an expression of labour productivity. For example, if a company produced 10,000 units within a one-year period and the company workforce worked 5,000 total hours within this same year, you would divide 10,000 by 5,000, resulting in a productivity rate of 2 units per hour.