Difference between production and productivity

• Production refers to the output produced by a firm during a given period of

time.
• Productivity refers to output per unit of input
Types of productivity
Productivity can be divided into:
1. Productivity of labour;
2. Productivity of capital;
1. Productivity of labour.
Definition: It refers to output per worker or output per labour hour.
Calculation of productivity of labour
It can be calculated in two ways as shown below:
i) Output per worker = Total output ÷ number of workers
ii) Output per labour hour = Total Output ÷ total labour hours.

2. Productivity of capital
Productivity of capital refers to output per machine or output per machine hour.
It can be calculated in two ways as shown below:
Output per machine = Total output ÷ number of machines;
Output per machine hour = Total output ÷ machine hours
Ways to increase productivity
a) Improving the productivity of land
1. Fertilizers and pesticides. Fertilizers are chemicals given to plants to
improve their health and appearance, and raise crop yields. Pesticides are used
to kill pests.
2. Irrigation. This involves diverting water from natural sources such as rivers,
lakes or streams, to land which needs more water to become more productive.
3. Drainage. Some areas of land are unproductive because they are flooded.
Drainage can be used to make such land more productive.
4. Genetically modified crops. Producing GM plants involves transferring
genes and DNA from one organism to another. This results in plants that are
more resistant to disease and in some areas more attractive to consumers.
5. Reclamation: In some circumstances, it is possible to create new land from
oceans, riverbeds or lakebeds. If more fertile land can be found to grow crops,
the productivity of the earth’s land will rise.

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b) Labour productivity

Labour productivity is defined as output per worker. It can be calculated by:

Labour productivity = total output / No. of workers
How to improve labour productivity
1) Education and training. This might involve providing more equipment for
schools and improving the quality of teaching. The government can invest more in
vocational education while firms can improve the productivity of their workers by
providing their own training.
2) Improving the motivation of workers. This motivation may be financial or non –
financial. Either way end result is a motivated worker.
Some non – financial are, i) Job rotation. ii) Team working, iii) Empowerment
Others are promotions, recognition, medical schemes, soft loans, houses and annual
trips for the workers.
3) Improved working practices. The way labour is organized and managed can
affect productivity. Working practices are the methods and systems of work that
employees are expected to adopt when taking on a job. This can be improved by
adopting new practices, for example:
a. Changing factory layout. It may be possible to change the factory layout by
repositioning work stations or reorganizing the flow of production. This will
improve productivity as workers may not have to move around as much.
b. Increasing labour flexibility. If workers are trained to do different jobs and can
switch at short notice, then this will improve labour productivity.
c. Adopting lean production. This involves reducing waste in production. Workers
may learn a variety of new working practices when this system is adopted.
4) Migration: It might be possible to improve the quality of human capital by
attracting skilled workers from overseas.

C) Capital and productivity

Each sector has ways to improve productivity.
1) Primary sector. In agriculture – use of tractors, combine harvesters, lifting
equipment and irrigation systems have helped to increase output, reduce waste
and improve working conditions. Agrochemicals and pesticides have raised crop
yields and biological research has developed plants that are disease resistant.
2) Secondary sector. Many factories and production lines employ complex plants
and equipments. This has led to huge increases in productivity.

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 i) Robots. Robots have reduced the need to employ people in jobs that were
boring and demotivating.
ii) Computer numerically controlled (CNC) machines. They are involved
in cutting, pressing, moulding, and sewing and welding.
iii) Computer integrated manufacturing (CIM). Computers are used to
guide and control the production of a good from start to finish.
3) Tertiary sector. The provision of services has tended to be more labour
intensive but the use of technology is becoming more widespread.
a) Retailing. There is growth of more internets shopping in the last few years.
The packaging used today is lighter, stronger and more attractive.
b) Financial services. People carry out banking transactions online. Firms
selling financial services can match customers with the most appropriate
product by feeding client information into a computer programme.
Health care. Developments in new vaccines and drugs have reduced suffering and
cured serious diseases. Surgeons can carry surgery using lasers, viewing the operation
on a screen with the use of fibre optics.