Klyushnikov A.
Gladkiy D.
PhD Zhukova O.S.
PhD Petrachkova O.S.
Donetsk State University of Manaement
Labour
Labour is human effort – physical and mental – which
is directed to the production of goods and services. But labour is not only a
factor of production, it is also the reason why economic activity takes place.
The people who take part in production are also consumers, the sum of whose
individual demands provides the business person with the incentive to undertake
production. For this reason when we are considering real-world economic
problems it is necessary to treat labour somewhat differently from the other
factors. There are social and political problems which have to be taken into account. For example, the
question of how many hours per day a machine should be operated will be judged
solely in terms of efficiency, output, and costs. The same question applied to
labour would raise additional considerations of individual freedom and human
rights.
It must be
borne in mind that it is the services of labour which are bought and sold, and
not labour itself. The firm cannot buy and own labour in the same way that
capital and land can be bought and owned.
The
supply of labour available to an economy is not the same thing as the number of
people in that community. The labour supply is a measure of the number of hours
os work which is offered at given wages over some given period of time. It is
determined, therefore, by the number of workers and the average number of hours
each worker is prepared to offer. Both of these features are subject to change
and, at any moment of time, the will depend upon a number of things.
1.
The size of total population. This is obviously
very important because the size of the total population sets an upper limit to
the supply of labour.
2.
The age composition of the
population. The age composition of a population takes accounts of the proportions
in the different age groups. Two countries might have in the same total
populations, but very different age compositions and hence very different
numbers in the working age groups.
3.
The working population. In many countries
the minimum age at which a person may engage in full-time employment is legally
controlled. In the UK this is now 16 years and the normal age for retirement
is65 years (60 in the case of women). The age range 16 to 65 (or 60 years)
covers the working population embraces all the people in these age groups.
The working population may be defined as the number of people who
are eligible for work and offer themselves for employment.
4.
The working week and holidays. The number of
people who work (or are available for work) is an important determinant of the
supply of labour, bit so is the average number of hours each person works. The
supply of labour provided by 20 people
working for 40 hours in the same as that provided by 40 people working 20
hours. Other things being equal, the shorter the working week, the smaller the
supply of labour.
The gradual reduction in the working week has been accompanied
by an extension of the annual holiday
period. Again this amounts to a reduction in the supply of labour.
It must not be assumed, however, that a fall in the supply of
labour implies a reduction in the output of goods and services. In spite of the
decline in the average number of hours worked by each person, output per worker
has continued of improved technology.
5.
Renumeration. The relationship
between quantity supplied and price is discussed at length later in this book,
but for the time being it should be apparent that there will be a relationship
between the amount of work offered and the price paid for that work. Generally
speaking, when wage rates are relatively low, increases in wages will tend to
lead to an increase in the supply of labour, but there comes a point when higher
incomes make leisure more attractive. When incomes are relatively high,
therefore high wage rates may reduce the amount of labour offered by the
individual worker.
References:
1. Charles Robert McCann, Jr.,
2003. The Elgar Dictionary of Economic
Quotations, Edward Elgar;
2. Musgrave
R.A. Public finance in theory and practice. McGraw-Hill Book Company,1984
3. Charles Robert McCann, Jr.,
2003. The Elgar Dictionary of Economic Quotations, Edward Elgar.