Productivity Growth Rate Calculator
Base Period (Old)
Current Period (New)
Productivity Growth Rate
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Understanding Productivity Growth
Productivity growth measures the efficiency of a business or economy by comparing the amount of goods and services produced (output) with the inputs (usually labor hours, capital, or materials) used to produce them. A positive growth rate indicates that you are producing more per hour worked than in the previous period.
The Productivity Formula
To calculate the productivity growth rate, we first determine the productivity for each period:
- Labor Productivity = Total Output / Total Labor Hours
- Growth Rate = [(Current Productivity – Base Productivity) / Base Productivity] × 100
Example Calculation
Imagine a software team in January (Base Period) and February (Current Period):
| Metric | January (Base) | February (Current) |
|---|---|---|
| Output (Features Completed) | 50 | 60 |
| Input (Work Hours) | 500 | 550 |
| Productivity | 0.10 per hour | 0.109 per hour |
In this scenario, the growth rate is 9.09%. The team became more efficient by delivering more output per hour invested.
Why Track Productivity Growth?
- Profitability: Higher productivity often leads to lower costs and higher margins.
- Competitiveness: Companies that produce more with less can price products more aggressively.
- Wage Growth: Sustained productivity growth is a primary driver for increasing employee wages without causing inflation.
- Resource Optimization: It helps identify where technology or training improvements are working.