Labour | ICSE Class 10 Economics Notes

This note covers the meaning and characteristics of labour as a factor of production, the meaning and types of division of labour with its advantages and limitations, and the meaning of efficiency of labour along with the reasons for the low efficiency of Indian labour.

What is labour and what are its characteristics?

Labour is one of the four factors of production. It refers to the physical and mental effort of human beings undertaken in the process of production in exchange for a reward called wages. Labour is supplied by workers of every kind, from a field worker to a surgeon, a teacher or a factory worker.

Definition: Labour. Labour means any physical or mental exertion of human beings directed towards producing goods and services, undertaken for the sake of a wage or payment rather than for the pleasure of the activity itself.

Labour has several characteristics that distinguish it from the other factors of production, land and capital.

1. Labour is perishable. A day's labour cannot be stored and used later. If a worker does not work on a given day, that day's labour power is lost forever and cannot be recovered.
2. Labour is inseparable from the labourer. Labour cannot be separated from the person supplying it, unlike land or capital, which can be sold or hired out while the owner stays away.
3. Labour has a weak bargaining power. Because an individual worker usually cannot survive without wages for long, and labour cannot be stored, a single worker often has less power to bargain with an employer than the employer has.
4. Labour is heterogeneous. Unlike units of capital, which can be identical, units of labour differ widely in skill, efficiency, education and attitude. No two workers are exactly alike.
5. Supply of labour is comparatively less elastic in the short run. The number of workers available for a particular skilled job cannot be increased quickly, since training takes time.
6. Labour has lower mobility. Workers are often reluctant or unable to move easily between occupations (occupational mobility) or between places (geographical mobility) because of attachment to family, language, custom and lack of skills needed elsewhere.

These characteristics together explain why labour markets behave differently from markets for land or capital, and why issues such as job security, working conditions and wages matter so much to labour.

What is division of labour?

Definition: Division of labour. Division of labour means breaking up the process of production into a number of separate operations or tasks, with each worker specialising in and repeatedly performing only one part of the whole task, instead of one worker doing the entire job alone.

Instead of one craftsman making an entire product from start to finish, the work is split into stages, and different workers are assigned to different stages according to their specialisation. For example, in making a pin, one worker may cut the wire, another may sharpen the point, another may attach the head and another may polish it, rather than one worker performing all these steps.

Division of labour arises because people differ in their natural abilities, interests and training, and because splitting a task allows each worker to concentrate on what they can do best and fastest. It is closely associated with the idea that "practice makes a worker perfect": the more often a worker repeats the same small task, the quicker and more skilled they become at it.

Division of labour becomes possible and worthwhile mainly where the scale of production is large enough to need many workers and where the market for the product is wide enough to absorb a large output, since splitting work into tiny tasks is not useful for very small-scale production meant for a single buyer.

What are the types of division of labour?

Division of labour can be classified mainly into three types, based on how the work is divided.

Simple division of labour is the broadest form, splitting society itself into different occupations. Complex division of labour goes a step further, splitting a single occupation or trade into many small repetitive tasks, which is the form most associated with modern factory production. Territorial division of labour applies the same principle to entire regions or countries rather than to individual workers.

What are the advantages of division of labour?

Division of labour is considered beneficial to production for several reasons.

1. Increase in efficiency and output. When a worker repeats the same simple task again and again, they become quicker and more skilled at it, so total output rises.
2. Saving of time. A worker who does only one operation does not have to keep changing tools or switching from one kind of work to another, which saves the time otherwise lost in such changes.
3. Right person for the right job. Workers can be allotted tasks that suit their particular aptitude and physical strength, so that each task is done by someone naturally suited to it.
4. Use of machinery is encouraged. Once a task is broken into small, standard operations, it becomes easier to design and use machines for that single operation, which further raises output.
5. Possibility of large-scale and mass production. Splitting work among many specialised workers allows a far larger quantity to be produced than a single worker could produce alone, lowering the cost per unit.
6. Training becomes easier. It is quicker to train a worker in one small operation than to train them to perform an entire complex trade.

What are the limitations of division of labour?

Despite its advantages, division of labour has several drawbacks.

1. Monotony of work. Repeating the same small task over and over again, day after day, makes the work dull and mechanical, which can reduce the worker's interest and job satisfaction.
2. Loss of craftsmanship and skill. A worker who performs only one tiny part of a process never learns the complete trade and so loses the pride and all-round skill of a craftsman who makes a whole article.
3. Excessive interdependence. Since each worker depends on the work of other workers in the chain, if one stage of the process is held up, for example by a machine breakdown or a worker's absence, the whole process of production can be disrupted.
4. Dependence on the size of the market. Division of labour on a large scale is only worthwhile where the market for the product is wide enough; it is not suitable for goods made to individual order or for very small markets.
5. Risk of unemployment. A worker trained in only one narrow operation finds it harder to shift to a different job if that particular operation becomes unnecessary, for example owing to a change in technology.

What is efficiency of labour?

Definition: Efficiency of labour. Efficiency of labour means the capacity of a worker, or of labour as a whole, to produce a given quantity and quality of output with the minimum possible waste of time, effort and material.

Efficiency of labour, also called the productivity of labour, is usually judged by the output produced per worker in a given period of time. A labour force is said to be efficient when it can produce more output of good quality in a given time, using given resources, compared with another labour force.

Efficiency is not the same thing as the number of hours a person works; it concerns how much useful output is obtained from the effort and time put in. Efficiency of labour is influenced by factors such as the physical health of workers, their education and training, the tools and machinery available to them, working conditions, climate and the general attitude towards work in a society.

A country's overall economic growth depends considerably on the efficiency of its labour force, because an efficient worker produces more goods and services from the same amount of time and the same capital than an inefficient worker, which lowers the cost of production and raises national output.

What are the reasons for the low efficiency of Indian labour?

Indian labour is widely regarded as having relatively low efficiency compared with labour in some other countries, for a number of interconnected reasons.

These reasons are closely linked. Poor health reduces the ability to benefit from education and training, poverty worsens health and nutrition, and the lack of capital means that even a healthy, educated worker cannot produce as much as a worker abroad who has better machinery to work with. Improving the efficiency of Indian labour therefore usually requires action on several fronts together, rather than any single measure acting alone.

Going beyond the syllabus

Many of the reasons behind low efficiency, such as poor nutrition, illiteracy and the lack of capital, are also reasons behind low wages, so efficiency and the standard of living of workers tend to move together: better-paid, healthier and better-trained workers usually become more efficient, and more efficient workers in turn tend to be able to command higher wages over time. This two-way link is one reason why governments invest in public health, education and vocational training programmes for the workforce.

Glossary

• Labour — physical or mental effort of human beings used in production in exchange for wages.
• Division of labour — splitting a production process into separate tasks, each performed by a different specialised worker.
• Simple division of labour — specialisation by occupation, where different persons take up different whole trades.
• Complex division of labour — specialisation by process, where a single product passes through many hands, each doing one stage.
• Territorial division of labour — regions or countries specialising in goods for which they have a natural advantage.
• Specialisation — concentrating repeatedly on one particular task or trade in order to become skilled at it.
• Efficiency of labour — the capacity to produce a given output with minimum waste of time, effort and material.
• Productivity — the output produced per worker in a given period of time.
• Perishable (of labour) — describes labour power that, once lost for a day, cannot be stored or recovered later.
• Heterogeneous — not uniform; units of labour differ from each other in skill, education and attitude.
• Bargaining power — the ability of a party, such as a worker, to negotiate favourable terms in an economic exchange.
• Mobility of labour — the ease with which workers can move between occupations or between places.
• Monotony — the feeling of boredom caused by performing the same simple task repeatedly.
• Underemployment — a situation where more workers are engaged in an activity than are actually needed, so output per worker is low.

Common errors and misconceptions

• Misconception: Division of labour and specialisation mean the same as working harder. Correct: They mean splitting a task into parts, each handled by a particular worker; output rises through skill and repetition, not necessarily through greater physical effort.
• Misconception: Labour can be stored like a stock of raw material for use later. Correct: Labour is perishable; a day's unused labour power is lost and cannot be stored for future use.
• Misconception: All workers are identical units, like identical machines. Correct: Labour is heterogeneous; workers differ in skill, education, health and attitude, which affects their efficiency.
• Misconception: Simple and complex division of labour are the same thing. Correct: Simple division of labour is specialisation by occupation across society, while complex division of labour is specialisation by stage within a single process.
• Misconception: Division of labour has only advantages for production. Correct: It also brings monotony, loss of all-round craftsmanship and excessive interdependence between workers.
• Misconception: Low efficiency of Indian labour is caused by a single factor, such as climate alone. Correct: It arises from several linked factors together, including health, education, capital, working conditions and work culture.
• Misconception: Efficiency of labour means working more hours. Correct: Efficiency means producing more or better output in a given time, not simply spending more time at work.

Exam-style questions with model answers

Q1. Define division of labour. [2 marks]

1. Division of labour means breaking up the process of production into a number of separate operations or tasks.
2. Each worker specialises in and repeatedly performs only one part of the whole task, instead of doing the entire job alone.

Q2. State two characteristics of labour. [2 marks]

1. Labour is perishable: a day's labour cannot be stored and, if unused, is lost permanently.
2. Labour is inseparable from the labourer, unlike land or capital, which can be hired out while the owner stays away.

Q3. Explain, with an example, what is meant by simple division of labour and by complex division of labour. [4 marks]

1. Simple division of labour means specialisation by occupation, where different persons take up entirely different trades according to their aptitude.
2. For example, in simple division of labour, one person becomes a carpenter, another a doctor and another a farmer, each practising one complete trade.
3. Complex division of labour means specialisation by process, where a single product passes through several workers, each performing only one small stage of production.
4. For example, in making a pin, one worker draws the wire, another cuts it, another sharpens the point and another attaches the head, rather than one worker making the whole pin.

Q4. "Division of labour has both advantages and limitations." Explain this statement giving two advantages and two limitations. [4 marks]

1. One advantage is increased efficiency: a worker who repeats the same simple task becomes quicker and more skilled, raising total output.
2. A second advantage is that it allows the right person to be given the job best suited to their aptitude, improving overall output.
3. One limitation is monotony: repeating the same small task continuously makes work dull and can reduce the worker's interest.
4. A second limitation is excessive interdependence, since a breakdown or absence at one stage of the process can disrupt the whole chain of production.

Q5. What is meant by efficiency of labour? State three factors that influence it. [4 marks]

1. Efficiency of labour means the capacity of a worker to produce a given quantity and quality of output with the minimum waste of time, effort and material.
2. One influencing factor is the physical health and nutrition of the worker.
3. A second influencing factor is the level of education and technical training the worker has received.
4. A third influencing factor is the quantity and quality of machinery and tools available to the worker.

Q6. A factory produces an identical article using 20 workers, each of whom performs only one stage of making it rather than making the whole article alone. Identify the type of division of labour illustrated here and explain two reasons why this arrangement may raise the factory's total output. [4 marks]

1. This is an example of complex division of labour, where a single product passes through several workers, each performing one stage of the process.
2. One reason output may rise is that each worker, by repeating the same operation, becomes quicker and more skilled at that particular task.
3. A second reason is that workers save the time otherwise lost in changing from one kind of operation or tool to another.
4. A further reason is that breaking the process into simple, standard operations makes it easier to use machinery for each stage.

Q7. Discuss the reasons for the low efficiency of Indian labour. [6 marks]

1. Many Indian workers suffer from poor health and inadequate nutrition, which reduces their physical stamina for sustained work.
2. Illiteracy and a lack of technical training limit the ability of many workers to use modern tools and methods skilfully.
3. Widespread poverty and a low standard of living leave workers without the energy and motivation needed for high output.
4. A shortage of capital means that many workers use old or insufficient machinery, which keeps output per worker low.
5. Poor working conditions, including unsafe and unhygienic workplaces, lower workers' morale and concentration.
6. A hot and humid climate over much of the country tends to reduce the physical working capacity of labourers.
7. A lack of strong work discipline, together with absenteeism, reduces the effective hours actually spent on productive work.
8. Underemployment in agriculture, where too many workers are engaged on too little land, keeps output per worker low.

Q8. Explain territorial division of labour with one example, and state one difference between it and simple division of labour. [4 marks]

1. Territorial division of labour means that different regions or countries specialise in producing goods for which they have a natural advantage, such as climate, soil or mineral resources.
2. For example, a region with fertile soil specialises in growing a particular crop, while a region rich in coal specialises in industrial production.
3. Simple division of labour divides society into different occupations practised by individual persons, such as carpenter, doctor or farmer.
4. Territorial division of labour, by contrast, divides production between entire regions or countries rather than between individual workers.

Key takeaways

• Labour is physical or mental effort used in production in exchange for wages, and it is perishable, inseparable from the worker, heterogeneous and relatively immobile.
• Division of labour means splitting production into separate tasks, with each worker specialising in and repeating one part of the task.
• Simple division of labour is specialisation by occupation, complex division of labour is specialisation by process, and territorial division of labour is specialisation between regions or countries.
• Division of labour raises efficiency, saves time, places the right worker in the right job and encourages the use of machinery.
• Division of labour also causes monotony, loss of all-round craftsmanship, excessive interdependence and dependence on a large enough market.
• Efficiency of labour means producing a given output with the minimum waste of time, effort and material; it is the productivity of labour.
• Low efficiency of Indian labour is linked to poor health and nutrition, illiteracy, poverty, shortage of capital, poor working conditions, climate, weak work discipline and underemployment.
• Efficiency and the standard of living of workers are closely linked, so improving health, education and capital together tends to raise efficiency.

Test yourself

What is meant by labour as a factor of production?

Labour means the physical or mental effort of human beings used in production in exchange for a wage, rather than for the pleasure of the activity itself.

Why is labour said to be "perishable"?

Because a day's labour cannot be stored for later use; if a worker does not work on a given day, that day's labour power is lost permanently.

Name the three types of division of labour.

Simple division of labour (by occupation), complex division of labour (by process) and territorial or geographical division of labour (between regions or countries).

State one advantage of division of labour.

Repeating the same simple task makes workers quicker and more skilled, which raises total output.

State one limitation of division of labour.

It can cause monotony, since repeating the same small task continuously makes work dull and mechanical.

What does "efficiency of labour" mean?

It means a worker's capacity to produce a given quantity and quality of output with the minimum waste of time, effort and material.

Give two reasons for the low efficiency of Indian labour.

Poor health and nutrition reduce stamina, and illiteracy or lack of training limits the ability to use modern tools and methods skilfully.

Why does the hot climate of much of India affect labour efficiency?

A hot and humid climate tends to reduce the physical working capacity of labourers over sustained periods of work.