Labour Productivity Calculator
Output per labour hour and per person, the labour cost per unit that follows, and what a productivity improvement is worth in units, cost and headcount.
Labour productivity is output divided by hours worked.
How the labour productivity calculator works
Labour productivity is output divided by hours worked. It is the number that decides whether a plant can grow without hiring, and the labour cost per unit that drops out of it is what the finance team actually watches.
A 10% productivity gain does not save 10% of labour cost per unit — it saves 9.1%, because the denominator moves. Small distinction, but it is the difference between a forecast that holds and one that does not.
Formula: productivity = units / hours; labour cost per unit = rate / productivity
Worked examples
| Inputs | Units per labour hour | Note |
|---|---|---|
| 48,000 units from 32 people | 9.375 | 9.4 units per hour |
| A 25% gain | 9.375 | a fifth fewer people |
| Higher labour rate | 9.375 | more labour in each unit |
FAQFrequently asked questions
What is labour productivity?
Output per hour of labour. It is the cleanest measure of how much a process gets from the people in it, and the one that decides whether growth needs hiring.
Why does a 10% gain not cut cost by 10%?
Because cost per unit is rate over productivity, and 1/1.1 is 0.909. A 10% productivity gain is a 9.1% cost reduction; a 100% gain is a 50% one.
What is a loaded labour rate?
Wages plus on-costs — leave, insurance, retirement contributions, supervision. It is typically 1.3 to 1.6 times the hourly wage.
Should I count indirect labour?
For unit cost, yes — maintenance, quality and supervision are real. For measuring a line's own improvement, direct labour only is cleaner.
What drives productivity?
Downtime, changeovers, rework and waiting, far more than how fast people work. The other pages in this family measure each of those.
Where these figures come from
- Nakajima (1988) — Introduction to TPM — the origin of Overall Equipment Effectiveness and its six big losses
- Health and Safety Executive — the UK workplace safety regulator
Last checked: September 2026. Definitions follow standard operations-management practice; where plants commonly differ, the page says so.