Labor productivity is a universal criterion characterizing the efficiency of labor costs in material production. Its universality lies in two areas of its use as a tool at once: private - regarding individual production by an employee, workshop, enterprise, and public, relating to a region, country, or even a group of countries.
It should be recognized that this indicator is a really useful economic indicator that demonstrates the basic criterion of production efficiency, which determines, say, in the most particular case, how much production a worker will produce per person-hour (thus, the economic characteristic - labor productivity is the criterion of the level of social production.)
The formula for calculating it exists in several versions, taking different account of various factors affecting production. And there are many of them. If we talk about the development of the enterprise, such factors will be its automation and improving the quality of products, reducing costs and material consumption, progressive logistics schemes and energy efficiency, tax optimization, as well as improving the capital structure.
The Russian economy in the system of international labor productivity
The level of living labor costs in the production of material goods characterizes the manufacturability of social production. This indicator is an important criterion for the country's economic potential. According to this indicator, Russia is leading among the CIS countries, showing its growth from 1999 to 2011 by 60%. However, according to statistics, such an increase became possible due to the fact that on the eve, in the period from 1989 to 1998, labor productivity in the country systematically decreased. The formula for calculating its dynamics, compiled by the World Bank, showed that over the past decade, Russians have managed to significantly increase the competitiveness of the country's economy. In 2010, labor productivity in the Russian economy amounted to 43% of the level of developed countries that are members of the Organization for Economic Development and Cooperation (which includes 34 states, including the United States, Canada and EU countries) and 75% of the level of countries recently included in this community.
Historical assessment of labor productivity dynamics
An interesting analysis of the dynamics of labor productivity in Russia was presented by Valentin Mikhailovich Kudrov, Doctor of Economics, head of the Center for International Economic Comparisons. He compared the labor productivity of the USSR and the USA at different times. The scientist believes that under Khrushchev this indicator for the Soviet Union was at the level of 35% of the United States, while under Brezhnev (which was silent in every possible way), it significantly decreased - to 27%. At the present time, having overcome the crisis, Russia has again reached the level of this ratio, even slightly exceeding Khrushchev’s.
According to the scientist, on the way to increasing the efficiency of social production, it is necessary to improve the social structure, overcoming the systemic foci of inefficiency associated with:
- inefficient organization of labor;
- full load of obsolete production facilities;
- unqualified staff;
- the inadequacy of labor legislation to the challenges of our time;
- obsolete technologies;
- bureaucratic barriers;
- insufficient staff motivation;
- deficit of market financial flows.
Labor productivity as an emphasis on modern economic policy
Economists link the further increase in labor productivity with an increase in the manufacturability of production. The extensive path is irrelevant. The executive branch, carrying out strategic planning of economic development, must certainly monitor the correspondence of macroeconomic indicators of GDP and labor costs for its production. The significance of the problem of increasing labor productivity was manifested in the state planning of the relevant measures. In 2012, President of Russia Vladimir Putin signed Decree No. 596, which plans a long-term economic policy until 2018. This document also refers to increasing labor productivity in the Russian national economic complex by one and a half times, compared with the 2011 level. Realize this plan, as the president himself commented, will succeed only through the implementation of innovative scenarios of economic dynamization. Moreover, in key sectors of the economy it is necessary to reach the threshold of a fourfold increase in labor productivity!
The essence of increasing labor productivity
The problem of a cumulative reduction in production costs while reducing the proportion of living labor in them is a hallmark of modern technology. At the same time, the process of increasing labor productivity is not hidden, it is visualized by increasing the volume of production while ensuring a high level of its quality: production becomes more efficient. The latter means not only an increase in its volume, but also a decrease in the cost of a unit of production; optimization of the circulation cycle of goods; maximizing profit margins.
In addition, the long-term trend of improving the quality of labor should be accompanied by an increase in its remuneration (as a motivational factor in increasing individual production indicators by personnel). At the level of the executive branch, it is necessary to constantly compare how the effectiveness of a person’s labor is related to his personal well-being. In a progressive society, one should systematically correlate a person’s social status with his labor activity.
Labor productivity. Formula number 1
Obviously, the management of the process of increasing labor productivity should be based on the methods of its determination and evaluation. Plans to improve the efficiency of the use of living labor are drawn up using two indicators. Classically, labor productivity is determined on the basis of production as well as labor intensity. Production can be defined as the quotient obtained from dividing the volume of manufactured products (O) to the time spent on its production, calculated by the spent living labor (T) (see formula 1).
B = O / T (1)
Labor input is the reciprocal of production, i.e., it shows how much time an employee should spend on manufacturing products of a certain cost (see formula 2.).
W = T / Q (2)
It should also be clarified that the volume of manufactured products is calculated in cost (the most universal, widespread), in-kind, semi-natural and labor form.
In the mining industry, the natural form prevails, in light industry - conditionally-natural. The labor method uses a methodology when the actual time spent is compared with the standard.
Usually, production is calculated at arbitrary time intervals that clearly demonstrate labor costs (man-day, man-hour). However, it is obvious that this formula is approximate, qualitative. Indeed, in practice, non-linear function is labor productivity. The calculation formula should, at a minimum, depend on the number of production workers (i.e., take into account the scale of production) and the lack of production.
Labor productivity: time pressure of extensive development
Quite specific is the relationship between labor productivity and product quality. Currently, semi-automatic organization of production prevails in Russian industry. In this situation, an increase in production standards will inevitably lead the worker to an increase in “manual labor”. The latter circumstance, if he is inexperienced, means his failure to fulfill the plan, and in the case of qualifications, the quality of the products will decrease.
How can labor productivity be expanded extensively? The calculation formula will show: by increasing the length of the working day, (or by switching to a six-day working week). Profitability will really increase slightly due to the fact that fixed costs will remain unchanged. However, this in the long run leads to only one thing - social tension: “the lower classes do not want, but the upper circles cannot.”
Labor productivity in non-productive sectors of the economy
Is it only in the production sphere that labor productivity should be determined? The US economy, for example, shows a tendency to significantly exceed the share of services in GDP. For example, in 2010, the share of American material production in the country's GDP was less than 20%! From this it becomes obvious that the productivity of an engineer, analyst is determined by other criteria that are different from those relevant to an industrial worker. Qualification indicators in using special programs, access to reference data are relevant for them. The competence of the leadership and the coherence of the work team also affect their productivity.
Regarding the managerial link, the most important criteria are knowledge of the features of the entrusted enterprise and the manager's experience.
Labor productivity. Formula 2
For more relevance, the formula for determining labor productivity (P) will introduce labor costs, as well as the downtime factor. Downtime will be taken into account through Cpr (downtime coefficient), defined as the ratio of the actual downtime to total working time. The “manual labor” invested in production spent by the labor collective will be expressed through T1 — individual labor costs per worker, and H — number of employees. Thus, we have obtained the second formula for determining labor productivity (see formula 3):
П = (О * (1 - Кпр)) / (Т1 * Ч) (3)
However, as we have already mentioned, labor productivity is a complex and non-linear concept. Its formula, as is obvious, depends not only on the human factor.
Cost-Effective Labor Formula
It is precisely the problem of the feasibility of investment in production that is presented in a comprehensive manner - the main criterion for the effectiveness of the country's economy. It relies on the assessment of labor productivity, analyzing it versatile. The investor should be aware in advance what costs the enterprise founded by him will incur in his production cycle. Therefore, it is advisable for him to assess what costs he will incur for 1 ruble of production. Accordingly, the above formula will be expanded due to the indicators related to the unit of cost of production: short-circuit (capital costs); EZ (operational costs); P (repair costs); FROM (salary); N (taxes and obligatory payments); Other (other expenses incurred (administrative, other).
П = (О * (1 - Кпр)) / (З * Т1 * Ч) = (О * (1 - Кпр)) / ((КЗ + ЭЗ + Р + ОТ + Н + Др) * Т1 * Ч)
Managers Productivity Strategies
Consideration of the economic characteristics we are studying in the context of microeconomics involves a multifactorial environment. The leading direction in the development of industry is rightfully considered automation. Thus, the imperfectly performed control and management functions are purposefully transferred to specialized devices and automatic devices.
Many well-known managers, beginning to manage the company, begin the struggle for labor productivity with organizational measures: simplifying the structure, reducing employees who can’t cope with production standards, honing logistics, optimizing back-office. They also use the optimization of the range of products according to the criterion of profitability.
Average labor productivity
Rarely enough are companies and manufacturing enterprises that produce an assortment of products consisting of only one product. At the same time, it is obvious that each position of the product range entails different production costs. How is average labor productivity determined? The formula that determines the average output (V s) consists of the sum of the products of the number of manufactured products for each item in the assortment (O i) multiplied by the corresponding conversion factor (K i) (see formula 4):
In c = Σ O i * K i (4)
The coefficient itself is determined as follows:
- the least labor-intensive assortment position is identified;
- the complexity of any of its other positions is divided into the minimum complexity. This is the desired coefficient.
The aforementioned amount of works equals, by means of conversion factors, the production of heterogeneous products to the production of a homogeneous one with minimal labor input.
