Current turnover rate is 9.2% and the productivity is 100%,total labor cost is $1,209,000 which the lowest compare to our competitors. To determine whether the savings from the reduction in labour rates would compensate for the decline in productivity that would result from reduced morale and higher turnover. The question asks for you to assume a strike would reduce your productivity gains by half. Since many companies in the industry still have productivity levels of 100%, this doesn`t work. Instead, please assume that the productivity index will drop from 112% to 106%, and then use this decline in productivity against your company`s labour costs.