Labor Intensive

China A-Shares Definition

What is intensive work?

The term “labor intensive” refers to a process or industry that requires a large amount of labor to produce its goods or services. The degree of labor intensity is generally measured in proportion to the amount of capital required to produce the goods or services: the higher the proportion of labor costs required, the more labor-intensive the firm. labor.

1:26

Intensive work

Understanding intensive work

Labor-intensive industries or processes require large amounts of physical effort to perform the necessary tasks. In labor-intensive industries, the costs associated with obtaining the necessary personnel outweigh the investment costs in terms of size and volume. Although many labor-intensive jobs require low levels of skill or education, this is not the case for all labor-intensive jobs.

Advances in technology and worker productivity have moved some industries away from labor-intensive status, but many remain so. Labor-intensive industries include restaurants, hotels, agriculture and mining.

Less developed economies as a whole tend to be more labor intensive. This is quite common because low income means that the economy or businesses cannot afford to invest in expensive capital. But with low incomes and low wages, a business can remain competitive by employing many workers. In this way, companies become less labor and capital intensive.

Before the industrial revolution, 90% of the workforce was employed in agriculture. Food production was very labor-intensive. Technological development and economic growth have increased labor productivity, reduced labor intensity and allowed workers to turn to manufacturing and (more recently) services.

As real wages increase in the economy, this encourages firms to invest in more capital to increase labor productivity, so that firms can continue to pay the cost of more labor. Dear.

Special considerations

The agricultural industry is an excellent example of a labor-intensive industry. Jobs in this industry, which is closely linked to the cultivation of foodstuffs that must be picked with minimal damage to the plant as a whole (such as fruit from fruit trees), are particularly labor-intensive. The construction industry is considered to be labor intensive because most of the work required is practical.

Even with the use of certain tools, a person must be involved in the vast majority of the work. Many positions in the service industry are also labor-intensive. These positions include those in the hospitality industry and the personal care industry.

Labor costs include all costs necessary to secure the human capital required to complete the work. These costs may include funds for base salary, as well as benefits that may be granted. Labor costs are considered to be variable, while capital costs are considered to be fixed. Since labor costs can be adjusted during market downturns through layoffs or benefit reductions, labor-intensive industries have some flexibility to control their expenses. The disadvantages of labor costs in labor-intensive industries include limited economies of scale, since a firm cannot pay its workers less by hiring more of them, and the vulnerability to wage forces in the labor market.

Key points to remember

  • Labor refers to a process or industry that requires a large amount of labor to produce its goods or services.
  • Labor costs include all costs necessary to secure the human capital required to complete the work.
  • In labor-intensive industries, the costs associated with obtaining the necessary personnel outweigh the investment costs in terms of size and volume.

Leave a Comment

Your email address will not be published. Required fields are marked *