Productivity is basically defined as the measure of “the output from a production process per unit of input”. In labor, for example, it is typically a measure of “output per labor-hour.”

Productivity = Total Output / Total Input.

The formula of productivity, the basic calculation for productivity is simple:

One area of great concern to industrialists and capitalists is related to labor productivity and the impact of the many factors around it – workplace practices, the advent of computers, capital infusion, education and training, and many others.

The main reason is the fact that while the impact of human capital investments on the workers’ wages had been studied extensively, there had been little information on the direct effect of human capital on productivity.

Labor productivity

To date, however, there had been new studies conducted and published. These studies examined the link between labor productivity and a variety of workplace practices, capital, and computers, both in the manufacturing and non-manufacturing sectors.

In the conducted studies, the other issues factored in included the size and age of the business, material inputs, capital stock, workers’ experience, and capacity utilization.



The studies were done to check the factors that determine labor productivity for a given period, the size of capital stocks needed for material use, the equipment, and the workplace practices. They also included computer use, human capital investments, high-performance work systems, profit sharing, and recruitment practices.

One standout data, however, showed that increasing the educational level of employees by at least a year increases productivity as well. (8.5% in manufacturing and 13% in the non-manufacturing sector)


Training and decision-making

It demonstrated that formal training (done offsite, meaning from schools etc.) increased productivity in manufacturing. Computer savvy also enhanced productivity, especially in the non-manufacturing sector (sales, services, etc).

Other findings include that unionization or employee participation in decision-making also raised productivity. Also, it was found out that TQM (total quality management) system did not have any significant effects on productivity.

Rather, it was raising the proportion of workers in making decisions in the workplace (regular meetings, etc.) that showed a positive impact on labor productivity.


To date, computers have also played a significant role in productivity increase (12% output) compared in the ’80s when equipment investments accounted for 7% output growth.

Investments in computers and other IT equipment’s were about 1/3 of total investments in the 90s.



All in all, investments in education and training generate higher productivity. Moreover, it promoted higher wage growth.

Studies had shown that raising the workers’ educational level resulted in around 8 to 13% higher labor productivity

It had been found that investments in computer training (especially in the non-manufacturing group) resulted in higher productivity (and wages) of employees. Workers who use computers are paid 15% more than their counterparts who don’t.

However, the remaining challenge is to enable more workers equipped with skills to allow them access to better jobs. In such a scenario, they can enjoy a higher standard of living as well as contribute to higher productivity growth.


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