Calculate labour productivity and explain efficiency
Calculate output per employee for a stated period and link efficient resource use to business performance.
Exam scope and assessment notes
Cambridge IGCSE (9–1) Business Studies 0986, 2026 syllabus, Version 2. This is the separate 9–1 legacy route; 0774 replaces it for first assessment June 2027. Candidates are not assessed on constructing income statements or statements of financial position, nor on price-elasticity or exchange-rate calculations. Simple cash-flow forecast construction is assessed. Written practice is self-checked, not an official Cambridge grade; timed-paper evidence and human subject-teacher review remain outstanding.
Before you begin
- No previous operations study is assumed. Read the time period, output unit, cost data and operating constraints before calculating or recommending.
Work on paper. Try each question before revealing help, and explain why your method works.
Quick readiness check
How is labour productivity calculated in this syllabus?
What you will learn
- Calculate labour productivity
- Use matching units and periods
- Explain why efficiency matters
Measure output per employee
Labour productivity = output per period ÷ number of employees. State the output unit and period, such as 120 units per employee per week.
Use comparable output and employee figures for the same period. If employees work different hours, the simple syllabus formula still uses the stated number of employees; do not silently substitute an hours measure unless data and question ask for it.
Efficiency relates output to resources
Efficiency matters because labour, time, materials and equipment have costs and limited capacity. Higher output per employee may lower average labour cost or help meet demand, but the figure alone does not show product quality or employee wellbeing.
A business should check whether output is saleable and produced safely. Increasing speed at the expense of quality can create rework, waste or customer complaints.
Pause and explain
A team makes 300 units in a week with 10 employees. What is labour productivity?
Worked example
A workshop makes 480 chairs in one week using 12 employees. Calculate labour productivity.
Show the worked solution
- Use output divided by employees.
- 480 ÷ 12 = 40.
- Retain the output unit and period.
Answer Labour productivity = 40 chairs per employee per week.
Try a topic test
Choose Easy, Normal or Difficult. Save your answers and open worked review after finishing.
Test this topic →From guided practice to a new situation
Write your answer and reasoning first. Use a hint only if you are stuck. The model solution is for self-checking; your written work is not automatically marked.
A factory produces 1,050 components in a week using 21 employees. Calculate labour productivity.
Give me a hint
Divide weekly output by the number of employees.
Compare my reasoning
- Write 1,050 ÷ 21.
- Calculate 50.
- Keep components and week in the answer.
50 components per employee per week.
Look for these in your work
- Division correct
- Unit correct
- Period stated
A team raises weekly output from 800 to 900 units while employee numbers stay at 20. Calculate productivity before and after.
Give me a hint
Use the same employee count in each period.
Compare my reasoning
- Before: 800 ÷ 20.
- After: 900 ÷ 20.
- Compare the two per-employee results.
Before: 40 units per employee per week. After: 45 units per employee per week. Productivity increases by 5 units per employee per week.
Look for these in your work
- Both calculations correct
- Change interpreted
- Matching units used
A manager reports higher labour productivity after reducing staff, but customer complaints also increase. Explain why the productivity result is not enough to judge the change.
Give me a hint
The formula counts output per employee, not quality or customer experience.
Compare my reasoning
- The calculated ratio may rise when employee numbers fall.
- Complaints may indicate lower quality or service.
- Consider output quality, costs and customer outcomes together.
The ratio may have improved, but complaints suggest the output or service may have worsened. The manager should review quality, rework, customer satisfaction and total cost before deciding whether the change improved operations.
Look for these in your work
- Metric limitation identified
- Customer evidence used
- Balanced decision proposed
Common mistakes
- Dividing employees by output
- Dropping the time period
- Treating productivity as a measure of quality
What can you explain now?
How is labour productivity calculated in this syllabus?
Compare with the explanation
Output per period ÷ number of employees
This is the stated relationship.
After trying it yourself, choose your next review. This is your self-assessment.
Your review choice appears on Today. Sign in to sync it across devices.
Make it stick
What figures are needed for labour productivity, and which quality information is not included in the formula?
If you needed the solution, close it and solve the problem again from a blank page. A correct answer is stronger when you can explain the reason for each step.