Introductory Economics

Introduction to Labour and its Characteristics

Introduction to Labour:

• 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 day’s 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: Labourer’s 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:

1. Simple Division of Labour
2. Complex Division of Labour
3. Territorial Division of Labour

1. 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.

2. 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.

3. 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.