Labor Productivity

Labor productivity means the amount of output produced per hour of work. In simple terms, it shows how efficiently workers produce goods and services. Labor productivity is important because higher productivity can support economic growth, wage gains, and lower inflation pressure. If workers produce more per hour, businesses can pay higher wages without necessarily raising prices. For example, if new technology helps workers produce more in the same amount of time, labor productivity increases. Labor productivity is not the same as working longer hours. It measures output per hour, not total hours worked.