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1. Labor has a tendency for 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 labor. It means labor is the beginning of production. Goods are produced to satisfy human needs. When we absorb them, production comes to an end? So that’s why this is the reason, labor is both the beginning and the end of production.
2. Differences in the Efficiency of the Labour:
Laborer differs inefficiency. Some laborers are more efficient due to their ability, skill, and training, whereas others are less efficient on account of their illiteracy, ignorance, etc.
3. Indirect Demand for Labour:
The consumer goods like bread, vegetables, fruit, milk, etc. have direct demand as they satisfy our needs directly. But the demand for laborers is not direct, it is indirect. They are demanded so as to produce other goods, which assure our needs. So, the demand for laborers depends upon the demand for goods which they help to produce. Therefore, the demand for laborers arises because of their productive capacity to produce other goods.
4. The laborer is the Human being, not a Machine:
Every laborer has his own tastes of interest, habits, and feelings. Therefore, laborers cannot be made to work like machines. Laborers cannot do work round the clock like machines. After the continuous work for a few hours, leisure is essential for them.
5. A Labourer put for sells his Labour and not Himself:
A laborer sells his labor for salary and not himself. ‘The worker sells work but he himself remains his own property’. For example, when we buy an animal, we become owners of the services as well as the body of that animal. But we cannot become the owner of the laborer in this sense.
6. Increase in Wages may reduce the Supply of Labour:
The supply of goods increases day by day when their prices increase, but the supply of laborers decreases when their wages are increased. For example, when wages are very much low, all men, women, and children in a laborer’s family have to work to earn their livelihood. But when wage rates are increased, the laborer may work alone and his wife and children may stop working. In this way, the increase in wage rates decreases the supply of laborers. Laborers also work for fewer hours when they are paid more and hence again their supply decreases.
7. Difficult to find out the Charges of Production of Labour:
We can easily calculate the charges of production of a machine. But it is not easy to calculate the charges of production of a laborer 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 of his education, food, clothes, etc. Therefore, it is very difficult to calculate the cost of production of a laborer.
8. Labour is a Vital Factor of Production:
Land and capital are considered as the yielding factors of production because they alone cannot start the production process. Production from land and capital starts only when a man makes the efforts. Production begins with the active participation of man. Therefore, labor is the most important factor in production.
9. Labor produce Capital:
Capital, which is considered as a different factor of production is, in fact, the result of the reward for labor. Labour earns wealth by way of production. We know that capital is the portion of wealth that is used to earn income. Therefore, capital is formulated and accumulated by labor. It is a fact that labor is more important in the process of production than capital because capital is the result of the working of labor.