Labor and Employment

Prepared by: Rommel Gonzales, Kimberly Mallari & Wendy Manaig

Human Effort

Physical Effort

Mental Effort

Physical Effort

They are using their muscles to earn a living.

Mental Effort

They are using their creativity, resourcefulness and critical thinking.

CHARACTERISTICS OF LABOR

Characteristics of Labor

1. Labor is Perishable

2. Labor and the individual are inseperable

3.Labor supply does not change quickly

4. Most employable persons do not like to move. The following reasons are the

following:

They want to stay close with their families

They are not aware of the demand for their services elsewhere

They lack the required skill.

They cannot afford the cost of moving from one place to another

Kinds of Labor

Kinds of Labor

Manual Labor

This type of labor mostly involve the exertion of physical effort specifically the use of brawn and muscles. Examples of manual labor are those performed by construction workers, dishwashers, farm workers and many.

Clerical Labor

This type is considered as next higher in order than manual labor. Very little mental effort is required in clerical work as the job becomes routine after a while. Examples are Office clerks, sales clerk

Professional

LaborThe job of the professional requires a higher degree of intelligence than those clerks. A college degree is a requirement. Examples are Lawyers, Physician, Teachers, Engineering, Nurses, chemist and others

The Labor of

Management Managers of all kinds and types perform functions which may be referred to as labor of management. Examples are Supervisors, Managers, Area managers, foreman and etc.

The Labor of

Enterpreneur The entrepreneur is one who

organizes the business and see to it that the business becomes stable. The entrepreneur bears the risk of

running the business.

The Labor of

inventorsA very important ingredient of economic development is the output of the inventors. Without them, our world will be a dull place to live. Inventions like the electrical lamp and the motor car are only some of the outputs of scientist which were largely responsible for bringing the progress to the people

Supply of Labor

Supply of Labor

LaborIt is one of the factors of

production.

Suppliers of Labor spend their time on the following activities:

1. Market Activity

2. Nonmarket activity

The Effects of Wages on the Quantity of Labor Supplied

Household regards nonmarket activity as a basic requirement for wholesome living. If income is not a problem, they would rather spend all their time on it. But since they have to make some income, they will have to reduce the time spent on nonmarket activity so they can allocate some time for supplying labor to the market.

Market, Nonmarket Activity and ReturnActivity ReturnsMarket -immediate return in

the form of income

Nonmarket -goods and services produced in the home

-higher future income

-leisure

SUBSTITUTION EFFECT

If there are increase in wage rates and they feel that the returns they get from doing nonmarket activities are lower, they will tend to switch over some hours to market activity.

INCOME EFFECTWhen the household’s wage rate is higher, more income will be available to the household for spending. When the household decides to spend its money on leisure or other nonmarket activity , it reduces the time available for pursuing a market activity. This will result to the reduction of the quantity of labor supplied in the market.

The Demand for Labor

Quantity of Labor Demanded

Is the total number of man hours or man days hired by all firms in an economy. The demand for labor depend on the real wage rate.

Real Wage RateRefers to purchasing power of a given nominal or money wage. The nominal wage rate is the amount in pesos paid to a worker for a unit of work.

Problems of Labor

Unemployment and under employment

Inadequate wages

Industrial and labor-management conflict

Economic insecurities