Labour Productivity has been one of the major topics of discussion in this evolved age of globalization and cut-throat competition. It has always been one of the major parameters of defining the potential and efficiency of an organization/company. In basic terms, it measures the amount of goods and services produced in one hour of labour.
India has been one of the most looked out country all around the globe when it comes to productivity, since the nation has the youngest population and the largest workforce than any other country. India’s Labour productivity has been on the rise lately and has improved by 5.32% YoY in December 2017, which was at 4.90% in the year 2016. It was calculated by using the annual Gross Domestic Product per person employed.
Growth in labour productivity depends on three major factors. They are mentioned below:
- Investment and savings in physical capital
- Evolution in technology
- Human capital
Physical capital refers to the amount of money people have in savings and in investments. New technology links to the evolution of technology and advancements such as robots, artificial intelligence and assembly lines. While human capital means the increase in education and improvements in skills of laborers and workforce. An increase in labor productivity is directly linked with improvement in the above three factors.
Indian labor productivity has seen a paradigm shift in the recent years, especially in the last decade. It grew at an astounding annual rate of 5.52% which is much higher than what the country saw in the 1990s which were about 3.05%.
The increase in India’s labor productivity is a good sign for the manufacturing industry as it implies a greater production potential. A better production potential implies to a greater amount of yield and more suffixed and quality products which will be offered by the Indian market to its customers and prospects.
One of the peculiar characteristics of the Indian manufacturing industry is the dominance of small-scale production units which also includes household entities. Though they are limited to produce in small qualities at the moment, the ‘Make in India’ campaign has infused technology and advancements in this unorganized sector which is bound to increase the labor productivity of the country in the near future. Moreover, as a result of this, unorganized sector’s access to credit has also been improved and is bound to gain from the recent developments.
On the other side, large production units have been on the brim and the numbers suggest that it has managed to take advantage of these improvement factors and might lead the global peer in production planning, supply chain management, quality maintenance, talent management and capability building with the subsequent increase in labour productivity of the country.
Measuring labor productivity provides a very important and useful insight into understanding an economy and analyzing its trends. It is also important to measure and analyze the cyclical changes in the economy. If the current scenario is to be analyzed, the facts and data clearly indicate that India has evolved to be a more mature market for investments and has shown exceptional potential for better revenues and quality products. At the moment, much of India’s success and emergence in the global market is credited to the increased productivity of the country.
Team Faber has helped clients across industries complex engineering industry where the client is one of the largest manufacturers of cryogenic tanks to textile machine manufacturing industry to the ceramic manufacturing industry with an immense improvement in productivity without incurring any additional cost. The tools and approaches are implemented in such a way that it meets the clients’ needs, gifting them the maximum returns. The solutions are applicable across industries and sectors. These concepts are industry neutral and can be deployed in your organization as well.
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