Labour as a Factor of Production: 14 Main Peculiarities

The following points highlight the fourteen main peculiarities of labour as a factor of production. Some of the peculiarities are: 1. Labour is Perishable 2. Labour cannot be Separated from the Labourer 3. Less Mobility of Labour 4. Weak Bargaining Power of Labour 5. Inelastic Supply of Labour 6. Labourer is a Human being and not a Machine 7. A Labourer sells his Labour and not Himself and Others.

Peculiarity # 1. Labour is Perishable:

Labour is more perishable than other factors of production. It means labour cannot be stored. The labour of an unemployed worker is lost forever tor that day when he does not work. Labour can neither be postponed nor accumulated for the next day. It will perish. Once time is lost, it is lost forever.

Peculiarity # 2. Labour cannot be Separated from the Labourer:

Land and capital can be separated from their owner, but labour cannot he separated from a labourer. Labour and labourer are indispensable for each other. For example, it is not possible to bring the ability of a teacher to teach in the school, leaving the teacher at home. The labour of a teacher can work only if he himself is present in the class. Therefore, labour and labourer cannot be separated from each other.

Peculiarity # 3. Less Mobility of Labour:

As compared to capital and other goods, labour is less mobile. Capital can be easily transported from one place to other, but labour cannot be transported easily from its present place to other places. A labourer is not ready to go too far off places leaving his native place. Therefore, labour has less mobility.

Peculiarity # 4. Weak Bargaining Power of Labour:

The ability of the buyer to purchase goods at the lowest price and the ability of the seller to sell his goods at the highest possible price is called the bargaining power. A labourer sells his labour for wages and an employer purchases labour by paying wages. Labourers have a very weak bargaining power, because their labour cannot be stored and they are poor, ignorant and less organised.

Moreover, labour as a class does not have reserves to fall back upon when either there is no work or the wage rate is so low that it is not worth working. Poor labourers have to work for their subsistence. Therefore, the labourers have a weak bargaining power as compared to the employers.

Peculiarity # 5. Inelastic Supply of Labour:

The supply of labour is inelastic in a country at a particular time. It means their supply can neither be increased nor decreased if the need demands so. For example, if a country has a scarcity of a particular type of workers, their supply cannot be increased within a day, month or year. Labourers cannot be ‘made to order’ like other goods.

The supply of labour can be increased to a limited extent by importing labour from other countries in the short period. The supply of labour depends upon the size of population. Population cannot be increased or decreased quickly. Therefore, the supply of labour is inelastic to a great extent. It cannot be increased or decreased immediately.

Peculiarity # 6. Labourer is a Human being and not a Machine:

Every labourer has his own tastes, habits and feelings. Therefore, labourers cannot be made to work like machines. Labourers cannot work round the clock like machines. After continuous work for a few hours, leisure is essential for them.

Peculiarity # 7. A Labourer sells his Labour and not Himself:

A labourer sells his labour for wages and not himself. The worker sells work but he himself remains his own property. For example, when we purchase an animal, we become owners of the services as well as the body of that animal. But we cannot become the owner of a labourer in this sense.

Peculiarity # 8. Increase in Wages may reduce the Supply of Labour:

The supply of goods increases, when their prices increase, but the supply of labourers decreases, when their wages are increased. For example, when wages are low, all men, women and children in a labourer’s family have to work to earn their livelihood. But when wage rates are increased, the labourer may work alone and his wife and children may stop working. In this way, the increase in wage rates decreases the supply of labourers. Labourers also work for less hours when they are paid more and hence again their supply decreases.

Peculiarity # 9. Labour is both the Beginning and the End of Production:

The presence of land and capital alone cannot make production. Production can be started only with the help of labour. It means labour is the beginning of production. Goods are produced to satisfy human wants. When we consume them, production comes to an end. Therefore, labour is both the beginning and the end of production.

Peculiarity # 10. Differences in the Efficiency of Labour:

Labourer differs in efficiency. Some labourers are more efficient due to their ability, training and skill, whereas others are less efficient on account of their illiteracy, ignorance, etc.

Peculiarity # 11. Indirect Demand for Labour:

The consumer goods like bread, vegetables, fruit, milk, etc. have direct demand as they satisfy our wants directly. But the demand for labourers is not direct, it is indirect. They are demanded so as to produce other goods, which satisfy our wants. So the demand for labourers depends upon the demand for goods which they help to produce. Therefore, the demand for labourers arises because of their productive capacity to produce other goods.

Peculiarity # 12. Difficult to find out the Cost of Production of Labour:

We can easily calculate the cost of production of a machine. But it is not easy to calculate the cost of production of a labourer i.e., of an advocate, teacher, doctor etc. If a person becomes an engineer at the age of twenty, it is difficult to find out the total cost on his education, food, clothes, etc. Therefore, it is difficult to calculate the cost of production of a labourer.

Peculiarity # 13. Labour Creates Capital:

Capital, which is considered as a separate factor of production is, in fact, the result of the reward for labour. Labour earns wealth by way of production. We know that capital is that portion of wealth which is used to earn income. Therefore, capital is formulated and accumulated by labour. It is evident that labour is more important in the process of production than capital because capital is the result of the working of labour.

Peculiarity # 14. Labour is an Active Factor of Production:

Land and capital are considered as the passive factors of production, because they alone cannot start the production process. Production from land and capital starts only when a man makes efforts. Production begins with the active participation of man. Therefore, labour is an active factor of production.