Peculiarities [features] of labour

Labour is a commodity to be bought and sold but unlike other goods it has certain features as it is not only a means of production but also an end of production.

Labour is a living factor of production and therefore different from other factors of production. Characteristics that make it different are known as the peculiarities of labour.

1] The labourer sells his services and not himself – A worker is not a slave. He is at liberty to leave his work/job. He retains his personality and induavility. Investment in labour becomes a part of the labourer and when he sells his labour he does not sell his education and training. Therefore, ownership of labour unlike land and capital cannot be transferred. According to Dr Alfred Marshall, “The worker sells his work but he himself remains his own property”.

2] Labour is inseparable from the labourer himself  – Since labour is inseparable from the the labourer the labourer has to be present at the place of work. e.g. a doctor has to be present in the dispensary unlike other factors of production.

“when a person sells his services, he has to be present himself where they are delivered”. Therefore the environment in which the worker has to perform is of utmost importance in deciding the supply of labour.

3] Labour is a perishable factor of production – Labour cannot be stored over a period of time. Labour once lost is lost forever. If a worker does not work for a particular day he loses on the lost hours which could never come back to him in future. This work can never be made up. Therefore a labourer cannot remain idle and thus sells his commodity “labour” even at low wages rather than go without income.

4] Labour has a weak bargaining strength –Also perishability of labour. Even if they go on strike it hurts the employer as it is the weapon against the employer. However it hurts the labourers too as sellers of labour are usually not affluent and have very little or no reserve fund , they cannot easily withhold it from the market. As Prof Erich Roll states, “the worker has no reserve price”.

Therefore workers may combine to form trade unions. Collective bargaining through trade unions removes the weakness amongst the workers and improves their wages, conditions of work etc..

5] Rapid adjustment of supply of labour to its demand is not possible.

Supply of labour changes slowly. In case of production of commodities or its supply can be quickly adjusted to demand for it

e.g. if demand for TVs increases, production can increase in a short time, but if demand for labour increases, it takes anything between 20 to 30 years to increase the supply. In case of professions it takes even longer as more training is necessary.

Eg, if during depression, if the demand for labour reduces then, its supply cannot be conracted and therefore the wages reduce. On the other hand increased demand fr manpower like during war, the supply cannot be increased like that of other goods thus, wages must rise.

6]. Supply of labour is not entirely dependent on wages – labour supply cannot be adjusted to demand easily and quickly this is because the general supply of labour is not is not entirely dependent on wages. It is also determined by many other factors like nature of work, conditions of work, scope for promotion, non-monetary benefits size and structure of total population, cost of education etc.

Besides labour supply cannot be adjusted to demand. Because change in wages may affect labour supply differently as other factors also influence labour supply eg if wage rate is very high the supply may decline.

7] Labour lacks mobility – Labour is more mobile than land because it is mobile both geographically and occupationally.

However, it is not as mobile as capital. Due to attachment to family, attachment to land, the differences in environment, language culture, customs, housing facilities, cost of conversion, new training etc, at different places are a hindrance to movement of workers from one place to another. Also it is less mobile because it is inseparable from the labourer. Therefore if reward is not sufficient and attractive, labour is not mobile

8] Labour is a human resource a living factor of production – Unlike machines he has intelligence feelings, likes dislikes, makes judgements etc. He works best when he is happy. Apart from wages he needs good working conditions, leisure, rest and recreation between working periods etc. The employer has to encourage him to his best. He is not and cannot be treated like a machine or a commodity.

Therefore not only economic but social and moral considerations should be taken into account in the study of labour.

9] The concept of cost of production is not applicable to labour – as it is to capital goods and consumer goods because cost of production of labour cannot be determined. The cost can be roughly estimated in terms of the expenses incurred by the parents for bringing up and educating their children. According to Dr Alfred Marshall, “Those who bear the expenses of rearing and educating him receive but little of the price paid for his services later”.

Therefore the supply of labour along with other things depends on the fore thought and selflessness of those who bring up the labourer.

10]. Labour is a heterogeneous factor of production – Machines, tools and equipments are uniform in machines and they are standardised but no two units of labour are identical. They differ in efficiency, skill, intelligence, education and other natural and acquired talents.

11]. Labour is an active factor of production – By itself however land cannot produce much nor can capital.. To increase production man has to work on land and use capital to increase efficiency. Therefore it is a active factor.

12. No wear and charges- In case of labour [unlike capital] it is difficult to calculate depreciation charges.

13. Labour has a derived demand – Demand for labour originates in the demand for some other commodity eg the demand for agricultural/industrial labour is derived in the demand for agricultural/industrial commodities.

14. Labour has a composite demand – Labour has alternative uses. It is jointly demanded with the other factors of production therefore it has a joint or composite demand.

15. Wages and salaries – is the reward or price for the use of labour.

Posted in General Economics