Labor as Factor of Production, Mobility & Specialization of Labor

What is Labor

Labor as factor of production is any human effort used productively (with an output of goods or services) for which payment is made. Honorary work and work for enjoyment are excluded

Special Features of Labour

  1. Perish ability – cannot be stored, today’s effort cannot be saved for tomorrow;
  2. Inseparability from labour – cannot be transferred by owner;
  3. Immobility as compared to capital and enterprise;
  4. Supply of labour not adjustable in short run (it takes 20 years to produce a worker).

Productivity of Labor

  1. Provision of social service
  2. Improvements in working conditions
  3. Optimum working hours
  4. Higher standard of education and training
  5. Improved efficiency of other factors
  6. Specialization

Specialization of Labor

Specialization of labor factor of productionincreases output, improves quality, reduces cost and is a prerequisite of capitalistic production but is limited by extent of markets and nature of demand.

Division of Labor

  1. Class wise Division – unskilled manual, skilled manual, technological, administrative, managerial and professional
  2. Industry wise Division – building, textile, mining
  3. Division of labor as trade, craft – fitter, electrician, carpenter
  4. Division of Labor as to process – combing, bleaching and dyeing.

Following are the advantages and disadvantages of division of labor as factor of production

Advantages of Division of Labor

  1. Most economical use is made of native skill.
  2. Degree of skill increases with repetition.
  3. Time in changing operation is saved.
  4. Fatigue is minimized.
  5. Scope for employment of machinery widens.
  6. Training time of workers is minimized and
  7. Inventions and technological developments are stimulated.

Disadvantages of Division of Labor

  1. Monotony
  2. Decline in pride of craftsmanship and satisfaction in work.
  3. Decline in pleasure & increase in pain because of drudgery.
  4. Increased immobility of unskilled labor.
  5. Increase in interdependence of crafts & industries.

Mobility of Labor

Mobility of labour as factor of production is the freedom with which labor can move and is:—

  1. Geographical between one region and another.
  2. Industrial mobility between occupations in comparable grades.
  3. Occupational mobility between grades in the same industry.

The relative immobility of labor causes economic friction in the optimum allocation of resources and in prices of labour of different types.

Factors militating against Mobility

  1. Inertia of human nature, aversion to change.
  2. Time required to learn new trade or skill.
  3. Family and regional ties.
  4. Tradition, class structure and cultural background.
  5. Restrictive practices as class prejudices.

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