Introduction
Efficiency of labor refers to the productive capacity of an employee. It is the ability of workers to produce the maximum quantity and specific quality of products within a certain time period. It helps to measure how the labor resource is utilized in the production process to maximize productivity of the firm.
Importance Of Efficiency Of Labor
The main importance of efficiency of labor can be pointed out as follows:
1. Increased Output
Efficiency of labor helps to increase working efficiency and performance in the workplace. It minimizes wastage and ensures optimal utilization of resources. Therefore, it improves the output of the company.
2. Increased Quality
Efficient labor minimizes the mistakes and errors that increases the quality of output.
3. Decreased Costs
Efficiency of labor helps to reduce operational costs and minimizes wastage that leads to decrease in the cost of production.
4. Increased Profitability
Because of increased output and decrease in the cost of production it increases the profitability of the business,
5. Competitive Advantage
Efficiency of labor helps to produce high quality products at lower costs that gives a competitive edge in the market.
6. Optimum Utilization Of Resources
It promotes maximum utilization of resources (both human and non-human resources) that helps to improve the performance of the organization,
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Factors Affecting Efficiency Of Labor
7. Economic Growth
As we know that efficiency of labor helps to produce more goods or services, it contributes to higher GDP that helps in the economic development of the country.
8. Innovation And Development
Efficient employees are more creative and innovative that leads to technological advancement.