Concept of Labour

• Any work, whether manual or mental, undertaken

for a monetary consideration is called labour in
economics.
• Any exertion of mind or body undergone partly or
wholly with a view to some good other than the
pleasure derived directly from the work.
• Labour = Labourer=worker=workman=employee
• Highly trained or skilled staff, unskilled or semi-
skilled manual workers all are part of labour.
• Human or manpower resources of any country.
 Cont…
• Commodity concept of Labour: Labour affected by
law of supply & demand in regard to its price
(wages).

• Machinery concept of Labour: Workmen are

operating organisms in an industrial undertaking
working as a complex machine, resulted in the
development of impersonal attitude towards
labour.
 Cont….
• Goodwill concept of Labour: Working & living
conditions influenced the commitment & efficiency
of labour directly.
• Humanitarian concept of Labour: Labour should be
treated as human beings rather than cog of
machine.
• Concept of Industrial Democracy: Employees are
industrial citizens with the right to be consulted in
the decision making process.
 Significance of Labour
 Labour is significant because:

• Utilization of other factors depends on the proper

utilization of time & energy on the part of workers.
• Labour is capable of handling responsibilities,
extending cooperation and achieving objectives.
• They now enjoy social security and should be given
statutory protection against retrenchment and lay off.
• Labour education which means training and research in
problems pertaining to labour is undertaken in India.
 Factors contributing to the importance of
labour
• The desire for greater industrialization
• Modernization & increased productivity
• Maintaining industrial peace
• Progressive labour legislation
• Association of labour with management in
industry
• Growing class-consciousness among labour
• Future prosperity of nation depends on labour
 Peculiarities of Labour
 Characteristics which distinguish it from the rest of the factors of
production:
• Labour is inseparable from labourer himself: Worker sells his work but
he himself remains his own property.
• When a person sells his service services, he has to present himself
where they are delivered: Therefore working environment is
important.
• Labour does not last: It is perishable.
• Labour has weak bargaining power.
• Rapid adjustment to the supply of labour to its demand is not
possible.
• Labour is not mobile as capital.
• Labour is a human factor: Not only economic but moral and social
considerations should also be considered.
 Labour Economics
• Visualizes the important role and status of labour in the growth of
the economy and studies the economic aspects of labour
problems.
• Labour Economic/Manpower Economics is characterized by:
 Efficient utilization and conservation of manpower and resources.
 Understand the processes by which manpower is applied and
utilized in modern society.
 Allocation, utilization and conservation of manpower.
 Concerned with labour problems arising from economic and non
economic activities.
 Problem oriented discipline.
 Scope of Labour Economics
• Institutional framework of the particular economic system.
• Size and Composition of the labour forces and labour
market.
• Labour as a factor of production, productivity, conditions
of work, industrial relations, standard of living, labour’s
share in national income.
• Labour’s risk and problems.
• Trade Unionism
• Labour’s status & position in society.
• Labour Legislation.
Theoretical & Institutional Aspects
• Theoretical Aspect of Labour Economics: Building
up of models of economic behaviour by making
different sets of assumptions and regarded as part
of general economic theory.
• Institutional Aspect of Labour Economics:
Concerned with studies of labour problems in an
institutional historical context.
• Nature of labour problems changes with a change in
institutional framework of the economic system.
 Importance of Labour Economics
• Developing economy like India and its orientation towards
the goal of equitable society, labour- the human counterpart
of economic process assumes unique importance.
• Plays an important role in social and economic progress.
• Maintaining industrial democracy.
• Recognition of the inherent dignity of labour with its
potential rights and aspirations.
• Increasing importance of HRM, Industrial Relations and
human relations in industry and research findings of
behavioural sciences
 Relation between Labour Economics &
Labour Problems
• Labour problems arise from individual and group conflicts, friction and
competition, in the process of adaptation to the working and living
environments.
• Labour problems refer to the personal problems of the individual
worker or the general economic and social problems arising from
industrial employment.
• Three major problem areas: income, security & organization.
• Since, labour problems represent results of the processes which form
the subject matter of labour economics , the two are interrelated.
• Problems of Labour Economics remain same from generation to
generation , however labour problems are transitory and dynamic in
nature and their intensity varies according to economic, social and
political conditions in the country.
 Economic & Social Characteristics of
Industrial Labour in India
• Rising population
• Deterioration of the traditional rural industries
on one hand and rising demand for labour from
rising urban industries on the other.
• Peculiarities of Indian Industrial Labour include:
 Illiteracy, Ignorance, Conservatism, lack of
stability, migratory nature, irregular attendance,
unpunctuality, low standard of living, lower
efficiency & productivity, lack of mobility etc.
 1.Migratory Character
• Majority of workers are immigrants from adjoining or remote
countryside.
• Inter district and interstate migration.
• Hence, industrial working class in India has not been a homogeneous
class.
• Population growth in urban areas.
• Causes of migration:
 Pressure of population on land, village and resources.
 Decline of the village handicrafts and cottage industries providing
employment.
 Unemployment, poverty and indebtedness in the villages.
 Joint family system.
 Cont.
 Increase in class of landless labourers due to
loss of land on account of accumulation of
debt, eviction of tenants, quarrel among
tenant heirs after the death of permanent
heir.
 To avoid social disabilities.
 To escape various penalties for offences
against social or moral code.
 Effects of Migration
• Industrial labour is heterogeneous from different places of the country
leading to new and unfamiliar environment.
• They don’t join any permanent labour union.
• Frequent absenteeism.
• Live in dark, narrow and congested quarters called ‘bustees’ lacking
sanitization & sunshine.
• Unhealthy & immoral practice such as drinking, gambling, immorality.
• Growing disproportion between employment opportunities and labour
supply in industrial areas increasing through influx from countryside has
merely substituted urban misery for rural poverty.
• Migratory character of worker taken as excuse by some employers for
not providing the social amenities of life which hare provided to
industrial workers in western countries.
 Reasons for temporary nature of migration
of Indian industrial labour
• Life in cities and conditions of work in
factories does not suit them.
• Without proper housing they cannot keep
their families with them.
• Cost of living in the cities is high.
• Moral Degeneration
• Frequent visits to villages.
• Loss of traditional forms of security.
 2. Low level of Literacy
• Literacy among industrial worker is high.
• Worker is aware Learning is essential for
improved learning.
• Rural worker is also keen about their
children’s education and their future.
 3. Low degree of Unionization
• Lack of union consciousness among worker’s.
• However, now the worker is more politically
conscious and can articulate his criticism of
existing order and hardships.
• Worker’s turn to unions for fulfillment of their
aspirations.
• They are more aware about the qualities they
want in the union leader.
 4. High Rates of Absenteeism
• Drains the productive resources of the
country.
• Absenteeism signifies the absence of an
employee from work that is unauthorized ,
unexplained, avoidable and wilful.
• = (manshifts lost in hours/total manshifts
scheduled to work in hours) * 100
 Causes for Absenteeism
• Frequent urge of rural exodus.
• Attachment to traditional forms of social security and confidence
in their efficacy.
• Sickness or pretended illness.
• High absenteeism in night shift may be due to discomfort and
uneasiness.
• Industrial accidents, religious and social ceremonies etc.
• Monotony of work, bad working conditions, poor supervision.
• Low morale of workers.
• High among workers below 25 yrs of age and among beyond 40.
• Management’s attitude.
Three way approach to control Absenteeism

• Proper assessment and appraisal of the

magnitude of problem by keeping regular and
up to date record of absenteeism data
collected on scientific basis.
• Causes leading to absenteeism in industries
should be investigated.
• Essential measures towards removal of such
causes should be undertaken.
 5. Labour Turnover
• The rate of change in the working staff of a concern during a
definite period.
• Inter-firm mobility of labour.
• Inarticulate labour unrest.
• Measures the extent to which old employees leave and new
employees enter into services of an organization in a given
period.
• Webb called it a ‘strike in detail’.
• Higher is the labour turnover, lower is the morale and
efficiency.
• It is the problem of labour stability.
Calculation of Labour Turnover
 Effect of Turnover
• Lowers efficiency
• Workers are not able to enjoy the various advantages of continued
employment.
• Due to defective system of recruitment , workers after leaving job in
particular mill are required to pay substantial price for re-
engagement in the same mill.
• Solidarity among workers is affected.
• Accident rates are high among new workers.
• Output suffers both in quality and quantity.
• Obstacle in complete utilization of country’s human and material
resources.
• Hiring as well as training cost are increased.
 Causes of Labour Turnover
• Avoidable : Related to personnel policy of the
establishment such as resignations, dismissals, lay-
offs.
• Unavoidable (Natural Turnover): Because of factors
like death, retirement, frictional unemployment etc.
• Reduction in quantity of work due to depression,
seasonal fluctuation etc.
• Resignations & Dismissals
• Badli system
 Methods to reduce Labour Turnover
• Proper statistics in regard of extent of turnover should be
maintained to analyze the problem.
• Vocational guidance is essential.
• Scientific system of recruitment, selection and placement
should be followed.
• Proper job analysis and worker analysis
• Research projects should be undertaken.
• Enlightened labour supervision.
• Proper communication between labour and management.
• Victimization of worker’s should be stopped.