1 May marks the global annual Workers’ Day, also known as May Day, when we recognise, observe and celebrate South Africans’ worker rights. Since 1995, we commemorate the roles of Trade Unions and other Parties in achieving equal employment standards for everyone.

Productivity SA is established in terms of section 31 (1) of the Employment Services Act, No. 4 of 2014, as a juristic person with a mandate to promote employment growth and productivity, thereby contributing to South Africa’s socio-economic development and competitiveness. Our vision is to lead and inspire a productive, competitive South Africa and improving productivity by diagnosing, advising, implementing, monitoring and evaluating solutions aimed at improving South Africa’s sustainable growth, development and employment through increase competitiveness.

Although many individuals will be spending this day with family and friends, we want to encourage everyone to realise the importance of this established public holiday, why it’s vital to reflect on the past movements while aiming to achieve our full future employment potential, and to increase labour productivity from the day after this one, and every other day to follow.

Labour productivity

Labour productivity refers to the amount of labour output derived from labour input. It’s of utmost importance for organisations on all levels (micro, meso, and macro) to understand and measure labour productivity to see if it needs to be increased.

Why does monitoring and measuring matter? Labour costs are usually a significant part of total operational costs, business efficiency and profitability are closely linked to the productive use of labour, and to remain competitive, it’s imperative to maintain low business unit costs.

However, it seems straightforward, but achieving increased labour productivity is not a simple task. Several factors influence how productive the workforce is, such as the extent and quality of fixed assets (equipment, IT systems, etc.); skills, ability and motivation of the workforce; methods of production; and external factors like the reliability of suppliers, to mention a few.

Tips on how to increase labour productivity

We will be sharing tips on how to increase labour productivity, yet, it requires a deep dive into the details to find what’s bringing labour productivity down and applying specific fixes.

  1. Hire local: When the workforce has to travel long distances, it lowers their effective pay rate, which doesn’t seem like a disadvantage to the organisation but can affect morale and engagement. An alternative is to consider managing your workers’ travel costs, i.e. supporting a mini-van service option to reduce travel and transportation costs.
  2. Expertise overlap: Plan your production process to avoid overlaps where differently skilled workers require the same tools simultaneously. This can lead to competing and frustration. Scheduled projects flow more efficiently, making sure access to limited tools or limited spaces is accounted for.
  3. Limit overtime: Overtime raises the organisation’s costs, which decreases capital productivity, and although extra hours mean extra income for workers, too many will result in staff burnout and decreased performance. Instead, consider employing more staff or add a production line.
  4. Team sizes: Find a natural rhythm where work gets done faster and better with the right size team and the right skill mix. Pay attention to ‘key man risk’, as well, so that the team don’t suffer when a skilled colleague is ill or on leave.
  5. Staff turnover: Set KPIs on staff turnover for managers and support them in people and culture management. Pay your workers sufficiently so that they don’t seek better salary or conditions elsewhere, which could negate your wage spend savings through diminished productivity.
  6. Lift morale: Low labour productivity suffers from low workplace morale, such as a culture of bullying, poor communication from management or between staff, lack of job security and poor working conditions. Appoint a team to ensure your new workers have a constructive attitude, set the tone for workplace communication and expectations on behaviour, and deal with tricky situations before they get out of hand.

As with numerous other organisational concerns, labour productivity is determined by several other factors. If you’re unsure about where to start, which processes to implement, and how to increase productivity and sustainable competitiveness, consult with us today.