What Is a Labour-Intensive Process?

FinanceBanking & FinanceFinance Management

Labour Intensive often refers to a terminology and a procedure or industry that relies on a significant quantity of workforce for the manufacturing of its products or services for its customers. The degree of labour intensity is usually assessed in terms of the amount of capital needed to develop the products or in order to provide these essential services.

Key Points Briefly

  • In the manufacturing sector, labour intensive always refers to a procedure or trade that needs a significant quantity of workforce to manufacture its products or provide its services.

  • Since the labour workforce cover a variety of aspects of manufacturing their expenses also range from obtaining the required employer to accomplishing the task

  • When it comes to significance and volume, the expenses related with obtaining the required people exceed the costs connected with capital expenditures in labourintensive businesses.

What is Labour-Intensive Workforce?

To fulfill tasks of labour-intensive businesses, the workforce always have to put in a significant amount of physical exertion, and it can be tiring on the mind and body. Generally, these workers have basic skill or minimum education, however this could vastly differ depending on the profession and the job, and the country of work.

When it comes to significance and volume, the expenses associated with obtaining the required people exceed the costs connected with capital expenditures in labour-intensive businesses. Some industries have been displaced from their labour-intensive position as a result of technological advancements and increased worker productivity, while many others have not.

Examples of Labour-Intensive Work

Developing countries have a vast amount of manual labour-intensive jobs for very low pay and industries such as mining, restaurants, agriculture are often seen to be labourintensive professions. Let us take the case of Company A, that is working in a developing nation and is struggling with its balance sheet to make profit. Despite a poor year, it could still afford to hire large number of labour-intensive employees and hope to reduce its losses and move towards the profit area. Company A benefits with a labour-intensive policy, due to lower salaries and higher workforce.

Let us take another example of a farmer in India, whose family has always been into agriculture and made their living. However, with recent educational and technological developments, farmers have moved to manufacturing sector and thus become less labour-intensive.

These two examples show the contrast and how this is used today in the world.

What special factors must be considered?

Many jobs around the world are labour-intensive, such as construction work, agriculture, and even jobs related to hotel sector. During manufacturing, and production of commodities, the workers despite working with equipment’s are still engaged in manual work. This could also be seen in the very popular Private sector jobs as well.

The biggest factor that must be considered is that a labour-intensive job expenses ranges from hiring till accomplishing that work. These expenses are variable and must calculated carefully before signing the agreement as this could escalate and incur major loss to the company as well.

Unlike executives who are under firing line constantly, one could argue that labourintensive jobs are much more protected from sudden changes. They have numerous disadvantages though and the major one is that their pay will always remain at a minimum. Most of them will also remain vulnerable as shown during the lockdown period.

raja
Updated on 28-Jul-2021 09:14:30

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