Productivity measures the amount of product, while labor costs measure the amount paid by the employers to employees.

Productivity refers to the level of efficiency, such as the products produced within a given period of time. Higher productivity means higher returns if the costs are properly managed. The two are directly related, such as you need to pay your employees to work and increase your production levels. Hence the higher employee salaries (labour costs) the higher the production is going to be. But it does not mean that the level of productivity is going to increase at a similar rate. Thus here come into the picture motivating decisions so that employees are more willing to be productive in their respective jobs.