Theory:

Labour:
Labour is the human input into the production process.
Alfred Marshall defines labour as 'the use of body or mind, partly or wholly, with a view to secure an income apart from the pleasure derived from the work'.
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Labour
Characteristics of Labour:
  • Important characteristic of labour is that, it cannot be stored nor postponed for the next day. The labour of an unemployed worker is lost forever for that day he does not work. Labour is more perishable than other factors of production.
  • Labour is essential for both land and capital to yield output. Without labour, both land and capital do not generate goods. E.g. In industries, no output will be generated when employees go on strike.
  • Labour is non-homogeneous. That is, skill and talent vary from person to person.
  • Labour cannot be separated from the labourer.
  • Labour is mobile. Person with more skills move from a low paid occupation to a high paid occupation.
  • Trade unions have more bargaining power than Individual labour. Trade unions can fight with the employer for a rise in wages and improvements in the conditions of work-place.  
Types of Labour:
  • Unskilled - e.g. Construction labour, Cleaner, etc.
  • Semi-skilled - e.g. Security guard, Bartender, Fisherman, etc.
  • Skilled - e.g. Tailor, Nurse, etc.
  • Professional - e.g. Teacher, Engineer, Lawyer, etc.
Division of Labour:
The idea of 'Division of Labour' was introduced by Adam Smith in his book 'An enquiry into the nature and causes of wealth of nations'
Division of labour means  the separation of a work  process into a number of tasks, with each task performed by a separate person or group of persons who are specialists in that particular process.
Example:
A Tailor stitches a shirt in full. In Garments exports company, cutting of cloth, stitching of hands, body, collars, holes for buttons, stitching of buttons etc., are done independently by different workers. Therefore, they are combining the parts into a whole shirt.
Merits of division of labour:
  • The efficiency of labour is increased when he repeats the same tasks.
  • Time and Materials are put to the best and most efficient use.
Demerits of division of labour:
  • When the labour repeats the same task, it makes his work monotonous and kills the humanity in him.
  • Specialization in a particular process makes it difficult to find other employment opportunities for the labour, resulting in increased unemployment.
  • Reduce the growth of handicrafts, and the worker loses the satisfaction of having made a commodity in full.
Adamsmith was  known as the Father of  Economics, and his Economics is Wealth Economics. He wrote two  classic works, "The Theory of Moral  sentiments(1759)" and "An inquiry into the nature and causes of the Wealth of  Nations (1776)".