How is Productivity Change Calculated?

Productivity Measurement is categorised either as a partial measurement whereby one factor of production is evaluated against total output; eg labour productivity a measure of output per worker, or multi-factor productivity where a combination of factors of production are evaluated against output. Multi-factor productivity shows how the organisation is combining its resources to produce its goods and services.

• Partial Productivity = Total Outputs or Value-Added Partial Input (No of labour hours worked)
• Multi Factor Productivity =Total Outputs or Value-Added Combined number of inputs

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What is Productivity Change?

 Productivity Change indicates the rate of change which has occurred within the production process over a specific period. For example a 2% increase in labour productivity in 2001 indicates that output per unit of labour has increase by 2% in 2001 relative to the previous period. This indicator allows the organisation not only to compare itself over periods but also to compare itself with other organisations within the industry or against the country's global achievement.  

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What is Total Factor Productivity (TFP)?

TFP measures the efficiency and effectiveness with which both labour and capital resources are used to produce output. In other words, TFP means making smarter and better use of the labour and capital resources available. A simplified way of expressing TFP is:

TFP = Output / Capital + Labour

The term "Multifactor Productivity" (MFP) is sometimes used interchangeably with TFP by economists. When concerned with measurement, there is a difference between the two terms. The term TFP suggests that all inputs (labour, capital and intermediate inputs such as raw materials, energy, etc) are taken into account in its computation, that is, the denominator of the TFP ratio includes all inputs. As the term MFP does not give such a connotation, it is considered more accurate because most measures of TFP are, in reality, computed on the basis of only labour and capital inputs. However, the distinction between MFP and TFP is usually made only by those concerned with measurement, and the term TFP continues to be used more widely.  

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What is Productivity?

 Productivity is basically a ratio of output to input. It can be expressed as:

Productivity = Output / Input

Productivity can be measured at various levels - economy, industry, company and operational.

At the economy level, output is measured by the Gross Domestic Product. At the industry and company levels, a commonly used measure is value added. At the operational level, where products or services are homogeneous, output measures can be in physical terms, such as the actual number of goods (e.g. televisions, calculators, etc.) produced.

The common input measures are number of workers, hours worked and fixed assets.  
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What Type of Company is the Barbados National Productivity Council?

 It is a Statutory Corporation and undertakes two types of activities:

1. Non-revenue generating activities for government-related entities and to the wider public of Barbados through productivity education.
2. Revenue generating activities for commercial entities.

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How Important is Productivity Measurement?

 Productivity Measurement tells where to look for opportunities to improve performances and shows how improvement efforts are faring. It provides check points for diagnostics activities or it indicates how well the goals of the organisation are being achieved. It also provides a source for economic growth to facilitate an improved standard of living. In addition, it reflects the competitiveness of an organisation.  

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What is Productivity Measurement?

 Productivity is an indicator of the efficient or inefficient rate at which resources are utilised within the production process of an organisation to produced valued output. Simply, it indicates the relationships between inputs (resources) and outputs (goods and services).  
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What is the role of productivity improvement in sustaining economic growth?

 Economic growth, no matter how impressive, will not be sustainable without improvements in productivity. That is why Barbados has always made productivity growth an important cornerstone of its economic policy. This importance can be seen in the Income and Prices Protocol, which lauded the development of smart partnerships between government, trade unions and private sector bodies.  

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How can our workforce benefit from being more productive?

 There is a wide range of benefits from being more productive. Through higher productivity, companies can produce better quality goods at competitive prices. This will increase their sales and enable them to expand their businesses. With higher earnings, companies can then give their workers job security, higher wages and bigger bonuses. They will also be able to provide other rewards such as better welfare benefits, job upgrading opportunities and better work environment. In a nutshell, productivity improvement will give all of us the means to enjoy a higher standard of living and a better quality of life.  

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