>Productivity is based on labor hours not cost.

Exactly, a distribution warehouse is a fixed size, it has a maximum capacity (floor space & racking), so despite being able to bring in more boxes and also hire more (agency) staff Hours to process the Units in and out, at some point that warehouse will grind to a halt and become like a traffic jam caused by too many people and too many Units much like we see with too many vehicles on the road at peak times.

Automated distribution warehouses (computer controlled conveyor belt systems) also have this problem, as do theme park rides, rail networks and airlines as other common examples. In the 90's automated warehouses in one company I was familiar with would also crash at peak times, namely Xmas because it couldnt handle the increased volume. When it crashed work was distributed to other warehouses in the network to balance the workload amongst the remaining operational warehouses. However with automated warehouses, management/board know its maximum handling capacity and just accept it, unlike human manned warehouses where management keep pushing for more until workers revolt!

This is why the Reddit AntiWork subreddit is interesting right now, we are seeing a country wide revolt which could spread to neighbouring Western countries. The spooks will be watching this like hawks. During a UK fuel protest in the UK, a protestor who was also a small business in the run up to his attendance at a second protest had a visit from 4 big burly guys in a new expensive Black Range Rover, one of the guys got out and told this small businessman, if you go to the next fuel protest, you wont have a business to come back to. Thats how the security services and others operate here in the UK!
Its the security services job to protect the country which includes the economy and other things, thats also why the illusion of privacy and tech security is just an illusion!

So other factors that can affect productivity in a country is poor transport networks, if people are spending more time travelling to and from work, then that country will be facing problems in years to come unless changes are made.

Look at commute times dropping during covid lockdowns. It was like getting to work 20 or 30 years ago, less traffic on the road yada yada yada.

Now changes in legislation can offset some of this which is in the hands of a Govt, like sunday trading (being open on Sundays) and also 24hr trading (being open 24hrs a day), internet shopping can also offset some or redistribute the demand on infrastructure but even the internet retailers have their problems and inefficiencies but these are now offloaded to the consumer, so legislation has created a cost saving for internet retailers in some countries.

I do agree that management are largely detached from the situation on the ground and you can see this in many ways with the problems that exist, but either they dont care or they dont know, some really are detached from the reality on the ground. Its also cheaper to address these on an ad hoc basis when intelligent consumers complain, management rely on stupidity and laziness to get away with poor goods or services. Remember inflation only measures the cheapest price of a good or service, it does not take into account the decline in quality or life span of a good or service.