Buzz
The economic strength of a country is often determined by its labor productivity. Labor productivity measures the amount of GDP (Gross Domestic Product) generated per hour of work per individual. According to Iayman, labor productivity is the value of work completed by a worker in one hour. As the amount of work done per hour increases, overall productivity rises, signaling a robust and growing economy.
Steps
Calculating Labor Productivity
Determine the Gross Domestic Product (GDP) of the country in question. GDP is the total value of goods and services produced within a country during a specific time period. You will need this figure to calculate productivity based on GDP.
- Typically, you won’t need to calculate this value yourself (it’s too complex). Instead, you can find the pre-calculated figure.
- You can find the GDP of most countries online. Start by searching for the country name and the term ‘GDP’ on Google. You can also look up the GDP of various countries on the World Bank’s website.
- Make sure to find the GDP figure for the period you are analyzing (e.g., for a quarter or a year).
- Keep in mind that the GDP figure for a country, even if published after a quarter, may reflect the annual value. In such cases, divide the annual GDP value by four to obtain the quarterly figure.
Calculate the total labor hours of a country. Essentially, you are determining the number of "work hours" required to produce goods and services. For any given country, find the total number of workers in the workforce for the specified period and multiply that by the average number of working hours.
- For example, if the average working hours are 40 and the country has 100 million workers, the total work hours will be 40 x 100,000,000, which equals 4,000,000,000.
- In the United States, you can find basic statistics on the Bureau of Labor Statistics (BLS) website.
- For other countries, labor productivity data can be found online in relevant economic studies.
Calculate productivity. Simply divide the GDP by the total labor hours. The result of this division will give you the labor productivity of that country.
- For example, if a country's GDP is 100 trillion VND and the labor hours total 4 billion, the labor productivity would be 100 trillion VND / 4 billion, which equals 25,000 VND per work hour.
Calculate Labor Productivity per Worker
Find the Gross Domestic Product (GDP) of the country in question. GDP is a measure of a country's total economic activity based on the value of goods and services produced. This figure is needed to calculate labor productivity based on GDP.
- Fortunately, GDP is a pre-calculated figure published by government agencies.
- GDP data for many countries is available online. Simply search for the country name and the term 'GDP' on Google. You can also find GDP figures for various countries on the World Bank’s website.
- Ensure you are looking at the GDP value for the period you wish to analyze (e.g., a quarter or a year).
- If the quarterly GDP is published as an annualized number (as in the case of the U.S.), divide the annual number by four to get the quarterly value.
Find the number of workers in that country. To calculate labor productivity per worker, you need to determine the number of workers in that country.
- In the United States, basic statistics are available on the Bureau of Labor Statistics (BLS) website. For other countries, you will need to search on Google.
Calculate labor productivity per worker. Simply divide the GDP by the total number of workers. The result of this division will give you the labor productivity of that country per worker.
- For example, if the GDP of a country is 100 trillion VND and the total number of workers is 100 million, the labor productivity per worker would be 100 trillion / 100 million, or 1 million VND per worker.
Use the labor productivity per worker figure you've calculated. This measure of labor productivity per worker can be used to evaluate the impact of population growth or employment changes on GDP. Multiply the labor productivity per worker by the increase in the number of workers to assess how the new workforce affects GDP.
Tips
- The two most common ways to improve a country’s or a nation’s labor productivity are through technological advances and improvements in worker efficiency.
