Performance measurement – efficiency ratio

good day sir

Is there any difference between calculating labor efficiency and production efficiency ? I am a bit confused on how we treat lost production hours for example do we treat lost production hours like idle time?

Q. A company makes a product for which the standard labor time is 2 hours per unit. The budgeted production hours for a given week were 820. During the week the production staff were able to produce 380 units of products. staff worked and were paid for 800 hours. During the week 20 production hours were lost due to a shortage of material.
what is the efficiency ratio?

I know the efficiency ratio is calculated as Standard divided by Actual but l do not understand why we have to subtract the 20 lost production hours from the worked and paid hours? (380units x 2hours)/ 800hrs less 20hours

kindly assist the best way you can.