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Lecture-21 Factors of Production (Labour) Learning Objective: Labour and Its Characteristics

Labour is defined as any work done for a reward. It has several key characteristics: it is inseparable from the labourer, perishable, and has weak bargaining power. Labour supply is independent of demand and changes based on wages. Division of labour involves splitting production into tasks and specializations to increase efficiency. It brings advantages like higher productivity but disadvantages such as monotony.

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69 views6 pages

Lecture-21 Factors of Production (Labour) Learning Objective: Labour and Its Characteristics

Labour is defined as any work done for a reward. It has several key characteristics: it is inseparable from the labourer, perishable, and has weak bargaining power. Labour supply is independent of demand and changes based on wages. Division of labour involves splitting production into tasks and specializations to increase efficiency. It brings advantages like higher productivity but disadvantages such as monotony.

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RohitPatial
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Lecture-21

Factors of production( Labour)


Learning objective: Labour and its characteristics
The labour has wide and diversified meaning in economics. Labour would mean
any work, manual or mental, which is done for a reward. It includes the work
done by farmers, workers, the services of teachers, doctors, actors, etc.
Marshall defined labour as any exertion of mind or body undergone partly or
wholly with a view to some good other than the pleasure derived directly from the
work.
Any work that is done for the pleasure does not come under labour. A person who
is working in his rose-garden as a hobby is not a labourer. But, if he works in rose
garden, which is cultivated for sales, then he is a labourer.
Labour like land is treated as the basic factor of production.
Land and labour when combined in right proportion produce wealth. In fact, land
or any other factor of production is of little use till labour is applied.
Characteristics of Labour
Labour is inseparable from Labourer: The worker has to sell his labour in person
and he has to be physically present, while delivering the work. He cannot deliver
the work in absentia. It varies from labourer to labourer depending on races,
climate, physical and mental alertness of labourer. Labour cannot be separated
from the labourer.
Labour is perishable: Labour cannot be preserved which means that labourer has
no reserve price. He has to sell the work without really minding the wages, for, a
days work lost is a loss forever. In other words, it is a flow resource.
Labour has very Weak Bargaining Power: Perishability of labour is a prime factor
for the labourer, which rather forces him to accept whatever the wage that is
offered. The weak bargaining power of the labourer is taken as an advantage by
the employer.
Lack of Free Mobility: Compared to capital, labour is less mobile. No doubt that
labourers move from one place to another and from one occupation to another, but

it is not a common feature. Thus, labour, lacks horizontal and geographical


mobility. This leads to a variation in wages among the occupations as well as
spatially.
Supply of Labour is Independent of Demand: Supply of labour depends on the
population in a country. Population is one factor which can neither be increased
nor decreased overnight. The increase or decrease is a slow process and supply of
labour is independent of demand.
Supply of Labour Peculiarly Changes with the wages: Normally the seller of a
good sells more when the price per unit of commodity is higher and vice versa.
But regarding labour a fall in wages leads to an increased supply of labour. A fall
in wages leads to reduction of their incomes,so to make good this fall in income,
family members who were not working earlier work to supplement the family
income.
Different Efficiency: Labourers are of different efficiency. Some are more
efficient on account of their ability, training and skill, others are less efficient on
account of their illiteracy and ignorance. Efficient labourers work better.
Means and End: Labourer is a means of production as well as an end because he
is the consumer also. It is different from land and capital as they are only the
means of production and not an end. Whatever is produced is also consumed by
the labour force. Therefore, labour is both a means and an end of production.
Active Factor: Labour is a more active factor of production than the land which a
passive factor of production. Labour is also as essential factor because without
labour land, natural resources or capital are of no use.
Different from Capital: The nature of labour is different from the nature of the
other factors of production. Labour has its own likes and dislikes, feelings, desire
to take rest. It influenced by the behaviour of employer and in turn influences
him. It is not easy to estimate the cost of producing the labour force in a country
whereas capital has no such problems. Therefore, labour is different from capital.

Division of Labour
When the making of an article is split up into several processes and each process
is entrusted to a separate set of workers, it is called division of labour.
Division of labour is associated with the labour efficiency and it helps in large
scale production. For instance, making the number of chairs will be more, if the
process is split up into different parts like making seat, back-rest, legs and then
assembling the parts instead of making the chairs individually.
Division of labour is meant to improve the efficiency of labourer. There are three
different types of division of labour:
Simple Division of Labour
Complex Division of Labour
Territorial Division of Labour
Simple Division of Labour:
It is also known as occupational specialization. This means that people in a
society undertake various occupations to make their livelihood.
The choice of an occupation depends on the suitability of an individual serving
the society. That is how we have in community, some are doctors, others are
lawyers, some others are teachers and we have blacksmiths and other craftsman.
They execute duties regularly and help the society to develop by helping
themselves through their professions.
The division of labour is fast growing with full adoption of requisite technology
and providing employment to millions of people.
Complex Division of Labour:
It is the assigning the work by task. The task here is a sub-process that is found in
producing a commodity. Each group of people is given a task in which it is
considered as specialist. For example, in making silk cloth, many sub-processes

such as reeling, weaving, dyeing, etc., are involved and for all these sub-processes
we require sophisticated technology and trained people to run the silk industry.
Territorial Division of Labour:
It refers to localization of industries. Certain areas or regions specialize in
production of a commodity. The examples are textile mills in Bombay and
Ahmedabad, silk sarees in Kanchi, jute mills in Kolkata, leather in Kanpur, etc.
Advantages of Division of Labour:

Increases productivity: As the individual worker concentrates on only one process


of the work, he is able to do it quickly and thus, the productivity of labour
increases.

Increases dexterity and skill: The worker becomes an expert due to repetitive
performance of the same work (process).

Large scale production: Division of labour improves production not only in terms
of quantity but also in quality since goods are made by specialists.

Right man in the right place: Under division of labour, workers are so distributed
among various works that each worker is put according to his ability.

Saving of Time: Since the worker is concentrating in only one activity there is a
serving time, which otherwise would have been wasted, had been attending to
several activities in the manufacturing of a commodity.

Saving Tools and Implements: As a worker has to perform a specific function, he


needs only a particular type of implements. In construction of farm ponds,
formation of bunds, digging off wells, etc., the labourers should be provided with
suitable implements and machinery for turning out the work efficiently with
minimum cost and time.

Disadvantages of Division of Labour:

Monotony: As the worker repeats the same work for a long time, it becomes
monotonous to the worker and soon he lacks interest in his work.

Risk of unemployment: If a worker (specialist) happens to lose his present job, he


may not be able to get similar job elsewhere immediately.

Retards Human Development: Continuous performance of same work narrows his


overall outlook. Since his faculties are tuned to perform a set work, his overall
growth is stunted.

Lack of General Responsibility: Since many people are involved in producing a


good, nobody takes the general responsibility in correcting a defect, it occurs.
Everybody thinks that it is not his duty. Thus workers become careless and
irresponsible.

Problem of Distribution: Several people involve in production of a product.


Based on the contribution, they should get their due share of product which is not
an easy task. This complicates the problems of distribution. This means
distribution of dividend/bonus should be done scrupulously for satisfying the
labour working in various divisions.

Questions
1 Any work that is done for the pleasure
a) Does not come under labour
b) Does come under labour
c) Both a and b
d) None of the above
2 Disadvantages of Division of Labour are
a) Monotony
b) Lack of General Responsibility
c) Problem of Distribution
d) All of the above
3 Labour is a
a) Stock concept
b) Flow concept
c) Both a and b
d) All of the above
4 Supply of Labour is
a) Independent of Demand
b) Dependent on demand
c) Both a and b
d) All of the above
5 Labour is an _____________ factor of production
a) Active
b) Passive

c) Neither a nor b
d) Both a and b
Answers
1 a)
2 d)
3 b)
4 a)
5 a)

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