Labor Force Participation Rate: application and calculation in Excel

The Labor Force Participation Rate shows the measure of labor participation of an individual worker in the overall result of the team, the production team. This is a generalized quantitative assessment of the labor contribution of an individual specialist. The using of LFPR prevents to a subjective assessment of the contribution of each employee to the common cause, the emergence of conflicts over the calculation and payment of wages.



The application of Labor Force Participation Rate

The basic value of the LFPR - is 1 or 100. Such the value is applied to the accruals to employees who, in the calculation period:

  • completed the task;
  • followed the requirements for production technology, quality, work protection;
  • observed labor discipline;
  • observed to the job duties, the working instructions.

The base labor force participation rate, depending on the indicators that reflect the individual contribution of the specialist to the collective result of labor. Each organization determines the individual dimensions of the LFPR. The decision is made by the council (assembly) of the team and is drawn up by the appropriate protocol.

In the future, the daily records of the indicators are carried out and the total LFPR is calculated.

The criteria that can reduce the size of the rate:

  • the failure to comply with the order of the head;
  • the violation of production technology;
  • non-fulfillment of the plan, established economic indicators;
  • defect, poor quality of work;
  • violation of the labor discipline;
  • non-compliance with work protection requirements; performance of work without adequate instruction, attire, personal protective equipment;
  • the applying of a faulty instrument, equipment, faulty technology;
  • the applying of equipment for other purposes, etc.

The indicators that increase the value of LFPR:

  • the manifestation of initiative, creative activity in the performance of the production, organizational and technical task;
  • the solving of a complex and responsible task;
  • the performance of work in a short time;
  • mentoring, etc.

LFPR is most often used for piecework pay. The tariff part is charged according to hourly rates and worked time. The premium and payment on labor force participation rate are paid out of the extra-tariff part of the FOT (over-tariff part of the salary).

With the using of the LFPR, the following surcharges can be distributed:

  • the prize for labor achievements (for the performance of the supernorm);
  • the one-time fee in connection with changes in standards;
  • the saving on salaries is connected with the release of staff.

The non-tariff salary, which is distributed according to the coefficient, refers to the cost of production.



Labor Force Participation Rate: the formula in Excel

The actual indicator of labor = basic LFPR + SC (the sum of raising / lowering criteria).

The base one - is 1 or 100. The lowering criteria for assessing of the work contribution are subtracted from the basic labor indicator. The increasing ones - are added.

This is example task. There is a team of 4 employees in the woodworking shop. They have 3 types of equipment. The salary is accrued with using LFPR. A system of raising and lowering criteria has been developed.

For the calculation of the individual LFPR the separate table is made:

LFPR.

For each reporting period, the separate table is filled. The totals - is the sum of the base and raising /decreasing criteria. To understand how wages are accrued using the LFPR, we will distribute the non-tariff part of the FOT between the members of the brigade. Suppose, for May this team established the sum of 65 000 rubles. This figure should be divided by the amount of LFPR for all employees and multiplied by the individual labor force participation rate.

reporting period.

Add the line «Total» in the table and calculate the sum of all employees' coefficients (the =SUM() function):

Total SUM.

The award for work achievements is calculated using the formula:

Download calculation LFPR example in Excel

Download example 2

Done.

To this figure it remains to add the tariff part, which is calculated on the worked time and hourly rates.


en ru