Productivity is a measure of production efficiency. Based on the number of labor hours needed to create a product, efficiency can be determined. Productivity efficiency is expressed as output per unit of input. In other words, the amount of product created based on the amount of labor needed. If a company’s productivity is low, it may invest more in technology to bring its productivity up to a competitive level.
Companies use productivity measures to gauge their efficiency, especially against competitors. Productivity can also be used to calculate the efficiency of GDP. As well, productivity can be measured across both sectors and industries.
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