Ch.4 Labour and Division of Labour

Ch.4 Labour and Division of Labour

1. Wage Payment

   • Piece Rate
     • Defition
       • Employee paid according to his quantity of output
     • Use under which situation
       • Output can be measured easily and product quantity can be easily monitored
     • Example
       • Factory
     • Advantage to emloyer
       • Raises worker's incentive to work
         • Increase productivity
           • Cost of calculating wages can be saved
             • Employees pay more attention on quality
     • Advantage to employee
       • Hard-working employees have higher income
     • Disadvantage to employer
       • Quality of output may drop
         • Stricter control needed
           • Extra resources used to measure worker's contribution
     • Disadvantage to employee
       • Income become unstable
   • Time rate
     • Definition
       • Employee is paid according to his working hours
     • Use Under which situation
       • Workers' contribution are costly to measure, have non-standardized outputs, required high product quality
     • Example
       • Teachers
       • Secretaries
       • Doctors
     • Advantage to employers
     • Advantage to employee
       • Income become stable
     • Disadvantage to employer
       • Workers may shirk
         • Less incentive for har-work
           • More supervision is required
     • Disadvantage to employee
       • Hard-working employees cannot have higher income
   • Profit-sharing
     • Definition
       • Portion of profit is distributed to workers
     • Use under which situation
       • When company would like increase employees working incentive
     • Example
       • Supervisors
         • Managers
           • Performance which is decisive to firm profit
     • Advantage to employer
       • Workers have higher sense of belonging&loyalty to the firm
         • Employees have higher working incentive
           • Part of the business risk can be shifted
     • Advantage to employee
       • Can earn more if firm earns a larger profit
     • Disadvantage to employer
       • Calculating wages will be costly
     • Disadvantage to employee
       • Income are unstable
         • Bear business risk as incomes fluctuate with firm's profit
   • Basic salary plus commission
     • Definitiom
       • Given basic salary and commission awarded as a percentage of the sales volume
         • Gift of money paid by customers to reward workers
     • Use under which situation
       • Wants to increase employee's working incentive
         • Basic salary allows workers have more stable income
           • When workers provide direct service to customers
     • Example
       • Marketing
         • Retailing industries
           • Catering industry
     • Advantage to emploers
       • Employees work harder to have bigger sales volume
         • Part of the business risk can be shifted
           • Supervision of work decrease
     • Advantage to employee
       • Hardworking employees have higher income
         • Good performance workers have higher income
     • Disadvantage to employer
       • Costly to calculate wages
         • Costly to calculate wages
     • Disadvantage to emploees
       • Income becomes unstable
         • Income become unstable
   • Tips

2. Mobility of Labour

   • Occupational Mobility
     • Measure the ease of moving from one job to another
       • If a factor can be used in another way, then occupational mobility is high
     • Factors affecting
       • Retraining Programs
       • Market obstacles
       • Remuneration and working condition
       • Specialized skill required
       • Market Information
       • Age
   • Geographical mobility
     • Measures the ease of a factor move form one place of work to another
       • If a factor can easily be changed to another workplace then its geographical mobility is high
     • Factors affecting
       • Transportation
       • Political factors
       • Social factors
       • Immigration law
       • Maket Information

3. Measure of labour

   • Labour supply
     • Quantity of Labour =Number of workers x Average working hours per worker
       • Quantity of labour in economy in certain period
       • Measure as the total number of working hour of all worker in certain period
     • Factors affecting
       • Size and structure of the population
         • Size of labour force increases, labour supply increase
       • Number of working hours
         • The Longer working hours, the lower the working incentive and willingness on work
       • Rewards for work
         • Wages, transports and housing allowances
   • Labour productivity
     • Labour productivity =Total output/Total working hours (unit per man-hour)
       • Measures the output per worker per unit of time
         • Cannot be raised by increasing working population and working hour
     • Factors Affecting
       • Education and training
       • Rewards and benefits
         • The more Rewards and benefits the more working incentive
       • Better working environment
       • Better health of workers
       • Mechanization or the quantity or quality of other factors of production
       • Division of labour
       • Better management

4. Division of Labour (DOL)

   • Calssification
     • Simple DOL
       • Produce a particular good
         • NO sub-division working process
     • Complex DOL
       • A worker specialises in a particular production stage
         • Have particular role in teamwork
     • Regional DOL
       • District or a country specialises in producing a particular good or particular production stage of a good
   • Advantages
     • Raise Labour productivity
       • Assigning the right person to do the right thing
       • Practice makes perfect
       • It save time in training
       • Save times in moving around jpbs
       • Encourages mechanization
     • Economy of capital goods
       • Fewer sets of tools are needed
         • Save resources producing capital goods
     • Improving living standard
       • Helps to produce a larger volume of goods and services
         • Reduce the average cost of production
   • Disadvantages
     • Work become dull and monotonous
     • Over-independence
     • Limited skills of workers
     • Greater risk of unemployment
     • Excessive standardization of products
   • Factors limiting the use of DOL
     • Size of market
     • Nature of product
     • Possibilities