Ch.4 Labour and Division of Labour

Wage Payment
1. Piece Rate
  1. Defition
    1. Employee paid according to his quantity of output
  2. Use under which situation
    1. Output can be measured easily and product quantity can be easily monitored
  3. Example
    1. Factory
  4. Advantage to emloyer
    1. Raises worker's incentive to work
      1. Increase productivity
        Cost of calculating wages can be saved
        Employees pay more attention on quality
  5. Advantage to employee
    1. Hard-working employees have higher income
  6. Disadvantage to employer
    1. Quality of output may drop
      1. Stricter control needed
        Extra resources used to measure worker's contribution
  7. Disadvantage to employee
    1. Income become unstable
2. Time rate
  1. Definition
    1. Employee is paid according to his working hours
  2. Use Under which situation
    1. Workers' contribution are costly to measure, have non-standardized outputs, required high product quality
  3. Example
    1. Teachers
    2. Secretaries
    3. Doctors
  4. Advantage to employers
  5. Advantage to employee
    1. Income become stable
  6. Disadvantage to employer
    1. Workers may shirk
      1. Less incentive for har-work
        More supervision is required
  7. Disadvantage to employee
    1. Hard-working employees cannot have higher income
3. Profit-sharing
  1. Definition
    1. Portion of profit is distributed to workers
  2. Use under which situation
    1. When company would like increase employees working incentive
  3. Example
    1. Supervisors
      1. Managers
        Performance which is decisive to firm profit
  4. Advantage to employer
    1. Workers have higher sense of belonging&loyalty to the firm
      1. Employees have higher working incentive
        Part of the business risk can be shifted
  5. Advantage to employee
    1. Can earn more if firm earns a larger profit
  6. Disadvantage to employer
    1. Calculating wages will be costly
  7. Disadvantage to employee
    1. Income are unstable
      1. Bear business risk as incomes fluctuate with firm's profit
4. Basic salary plus commission
  1. Definitiom
    1. Given basic salary and commission awarded as a percentage of the sales volume
      1. Gift of money paid by customers to reward workers
  2. Use under which situation
    1. Wants to increase employee's working incentive
      1. Basic salary allows workers have more stable income
        When workers provide direct service to customers
  3. Example
    1. Marketing
      1. Retailing industries
        Catering industry
  4. Advantage to emploers
    1. Employees work harder to have bigger sales volume
      1. Part of the business risk can be shifted
        Supervision of work decrease
  5. Advantage to employee
    1. Hardworking employees have higher income
      1. Good performance workers have higher income
  6. Disadvantage to employer
    1. Costly to calculate wages
      1. Costly to calculate wages
  7. Disadvantage to emploees
    1. Income becomes unstable
      1. Income become unstable
5. Tips
Mobility of Labour
1. Occupational Mobility
  1. Measure the ease of moving from one job to another
    1. If a factor can be used in another way, then occupational mobility is high
  2. Factors affecting
    1. Retraining Programs
    2. Market obstacles
    3. Remuneration and working condition
    4. Specialized skill required
    5. Market Information
    6. Age
2. Geographical mobility
  1. Measures the ease of a factor move form one place of work to another
    1. If a factor can easily be changed to another workplace then its geographical mobility is high
  2. Factors affecting
    1. Transportation
    2. Political factors
    3. Social factors
    4. Immigration law
    5. Maket Information
Measure of labour
1. Labour supply
  1. Quantity of Labour =Number of workers x Average working hours per worker
    1. Quantity of labour in economy in certain period
    2. Measure as the total number of working hour of all worker in certain period
  2. Factors affecting
    1. Size and structure of the population
      1. Size of labour force increases, labour supply increase
    2. Number of working hours
      1. The Longer working hours, the lower the working incentive and willingness on work
    3. Rewards for work
      1. Wages, transports and housing allowances
2. Labour productivity
  1. Labour productivity =Total output/Total working hours (unit per man-hour)
    1. Measures the output per worker per unit of time
      1. Cannot be raised by increasing working population and working hour
  2. Factors Affecting
    1. Education and training
    2. Rewards and benefits
      1. The more Rewards and benefits the more working incentive
    3. Better working environment
    4. Better health of workers
    5. Mechanization or the quantity or quality of other factors of production
    6. Division of labour
    7. Better management
Division of Labour (DOL)
1. Calssification
  1. Simple DOL
    1. Produce a particular good
      1. NO sub-division working process
  2. Complex DOL
    1. A worker specialises in a particular production stage
      1. Have particular role in teamwork
  3. Regional DOL
    1. District or a country specialises in producing a particular good or particular production stage of a good
2. Advantages
  1. Raise Labour productivity
    1. Assigning the right person to do the right thing
    2. Practice makes perfect
    3. It save time in training
    4. Save times in moving around jpbs
    5. Encourages mechanization
  2. Economy of capital goods
    1. Fewer sets of tools are needed
      1. Save resources producing capital goods
  3. Improving living standard
    1. Helps to produce a larger volume of goods and services
      1. Reduce the average cost of production
3. Disadvantages
  1. Work become dull and monotonous
  2. Over-independence
  3. Limited skills of workers
  4. Greater risk of unemployment
  5. Excessive standardization of products
4. Factors limiting the use of DOL
  1. Size of market
  2. Nature of product
  3. Possibilities

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Ch.4 Labour and Division of Labour

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