Professional Documents
Culture Documents
THE MEANING OF LABOR LABOR REFERS TO THE EXERTION OF HUMAN EFFORT TO ACQUIRE AN INCOME. HUMAN EFFORT INCLUDES PHYSICAL AND MENTAL EXERTION. MANY PEOPLE USE THEIR BRAWN AND MUSCLES TO EARN A LIVING. THESE PEOPLE SELL AN IMPORTANT RESOURCE THEY HAVE LABOR. HOWEVER, THE PHYSICAL EFFORT EXPENDED IN EXERCISING IN FRONT OF A TELEVISION CAMERA AND IS PAID FOR DOING IT, HE IS PERFORMING LABOR. IN THE SAME LIGHT, THE MENTAL EFFORT EXERTED IN SOLVING A CROSSWORD PUZZLES AND RECEIVES WEEKLY PAYMENTS FOR THE EFFORT, HE IS ACTUALLY PERFORMING LABOR. NO LABOR IS ONE HUNDRED PERCENT PHYSICAL OR MENTAL. ALTHOUGH THE JOB OF THE CONTRUCTION WORKER IS MOSTLY PHYSICAL, A SMALL PART OF IT IS MENTAL LIKE DECIDING WHICH TOOL TO USE. IN THE SAME LIGHT, ALTHOUGH THE WORK OF A TEACHERS IS. MOSTLY MENTAL EXERTION, A SMALL PART OF IT IS PHYSICAL LIKE WHEN ERASING THE BLACKBOARD. CHARACTERISTICS OF LABOR LABOR IS SAID TO POSSES CERTAIN CHARACTERISTICS DIFFERENT FROM THE OTHER FACTORY OF PRODUCTION. THES RAE THE FOLLOWING: 1. LABORIS PERISHABLE. 2. LABOR AND INDIVIDUAL ARE INSEPARABLE. 3. LABOR SUPPLY DOES NOT CHANGE QUICKLY. 4. MOSTEMPLOYABLE PERSONS DO NOT LIKE TO MOVE. KINDS OF LABOR LABOR MAY BE SIBDIVIDED INTO VARIOUS CLASSES. ALTHOUGH THERE IS NO DEFINITE POINT WHERE A CLASS ENDS AND ANOTHER BEGINS, THE SUBDIVISION IS STILL USEFULL FOR THEORETICAL PURPOSE. CASTILLO POINT OUT THE VARIOUS CLASSES AND THEY ARE BRIEFLY DESCRIBED AS FOLLOWS. 1. MANUAL LABOR THIS TYPEOF LABOR MOSTLY INVOLVE THE EXERTION OF PHYSICAL EFFORT SPECIFICALLY THE USE OF BRAWN AND MUSCLES. EXAMPLES OF MANUAL LABOR ARE THOSE PERFORMED BY CONTRUCTION WORKERS, DISHWASHERS, FARM WORKERS, AND MANY OTHERS. 2. CLERICAL LABOR - THIS TYPE IS CONSIDERED AS NEXT HIGHER IN ORDER THAN MANUAL LABOR. ALTHOUGH MOST PARTS OF THE CLERICAL WORK ARE DONE WITH PHYSICAL EFFORT, THE EXERTION IS NOT AS GREAT AS THAT IN MANUAL LABOR. VERY LITTLE MENTAL EFFORT IS REQUIRED IN CLERICAL WORK AS THE JOB BECOMES ROUTINE AFTER A WHILE. OFFICE CLERRKS ARE KNOWNTO PERFORM TASKS LIKE TYPING AND FILLING. SALES CLERKS, ON THE OTHER HAND, MAKE RESPONSES TO PRODUCT INQUIRIES AND PREPARE NECESSARY DOCUMENTS WHEN A SALE IS MADE.
3. PROFESSIONAL LABOR THE PROFFESIONS INCLUDES THE FOLLOWING: PHYSICIANS, LAWYERS, ENGINNRS, CHEMISTS, TEACHERS, NURSE, AND OTHER. THE JOB OF THE PROFFESIONAL REQUIRES A HIGHER DEGREE OF INTELLIDENCE THAN THOSE OF CLERKS. A COLLEGE DEGREE IS A BASIC REQUIREMENT. SOME EVEN REQUIRE AN ADVANCE DEGREE. MOST OF THE PROFFESIONS REQUIRE SUFFICIENT TRAINING AND EXPERIENCE. 4. THE LABOR OF MANAGEMENT MANAGERS OF ALL KINDS AND TYPE PERFORM FUNCTIONS WHICH MAY BE REFERRED TO AS LABOR OF MANAGEMENT. INCLUDED UNDER THIS CLASS ARE FRONT LINE MANAGERS LIKE SUPERVISOR AND FOEREMEN, MIDDLE MANAGERS LIKE BRANCH AND AREA MANAGERS, AND TOP MANAGERS LIKE PRESIDENT AND VISE PRESIDENT. ALL OF THEM RECEIVE SALARIES IN EXCHANGE FOR THEIR LABOR. BONUSES HAVE BECOME COMMON AND ARE GIVEN AS INCENTIVE FOR GOOD PERFORMANCE. 5.THE LABOR OF THE ENTRPENEUR THE ENTREPENEUR IS ONE WHO ORGANIZES THE BUSSINES AND SEES TO IT THAT THE BUSSINES BECOME STABLE. WHAT THE ENTRPRENEUR THINKS IS BEST FOR THE BUSSINES IS RELAYED TO THE MANAGERS FOR EXCUTION. THE ENTREPRENEUR BEARS THE RISK OF RUNNING THE BUSSINES. HE IS RESPONSIBLE FOR ITS SUCCESS OR FAILURE. HE IS REWARDE WITH PROFITS AND PENALIZED WITH LOSSES AS ACONSEQUENCE OF THIS DECISIONS. 6. THE LABOR OF INVANTORS A VERY IMPORTANT INGREDIENT OF ECONOMICS 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 OUTPUT OF SCIENTIST WHICH WERE LARGELY RESPONSIBLE FOR BRINGING PROGRESS TO THE PEOPLE. THE REWARD OF INVENTORS IS THE EXCLUSIVE RIGHT GRABTED BY THE STATE FOR THE USE OF THEIR INVENTIONS. MOST OF THEM DERIVE INCOME BY SELLING YHE RIGHT TO ANOTHER PARTY. SUPPLY OF LABOR IN THE PRODUCTION OF GOOD AND SERVICES, THE SUPPLY OF LABOR IS A VERY IMPORTANT CONCERN. AS HOUSEHOLD ARE THE SOURCE OF THE VARIOUS FACTORS OF PRODUCTION INCLUDING LABOR, IT IS IMPORTANT TO KNOW THE CIRCUMSTANCES THAT EFFECT THEIR DECISION TO MAKE LABOR AVAILABLE IN THE MARKET. SUPPLIERS OF LABOR (I.E., THE HOUSEHOLDS) SPEND THEIR TIME ON THE FOLLOWING ACTIVITY: (1) MARKET ACTIVITY, AND (2) NON MARKET ACTIVITY: WHEN HOUSEHOLD SPEND THEIR TIME SUPPLING LABOR TO THE MARKET, THEY ARE ENGAGED IN MARKET ACTIVITY. WHEN TIME IS SPEND ON LEISURE AND OTHER NONMARKET PRODUCTION ACTIVITIES LIKE EDUCATION AND TRAINING, THEY ARE EBGAGED IN NONMARKET ACTIVITIES. HOUSEHOLD MAKE AN ALLOVATION DECISION ON HOW MUCH TIME TO SPEND ON THE TWO ACTIVITIES. THEIR DECISION WILL BE BASED ON HOW THEY REGARD THE RITURN THEY GET FROM EACH. SHOWN IN TABLE 36 ARE THE TYPE OF RETURN THEY GET WHEN ENGAGED ON MARKET OR NONMARKET ACTIVITIES. THE EFFECT OF WAGES ON THE QUANTITY OF LABOR SUPPLIED
HOUSEHOLD REGARD 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 SPEND ON NONMARKET ACTIVITY SO THEY CAN ALLOBATE SOME TIME FOR SUPPLYING LABOR TO YHE MAEKRT.
MARKET, NONMARKET ACTIVITY, AND RETURNS ACTIVITY RETURNS MARKET THE FORM OF INCOME NONMARKET PRODUCED IN THE HOME HIGHER FUTURE INCOME LEISURE GOODS AND SERVICES IMMEEDIATE RETURN IN
HOUSEHOLD, HOWEVER, WILL NOT JUST SUPPLY LABOR AT ANY WAGW LEVEL. INSTESD, THEY ARE ONLY WILLING TO START DOING SO IF A CERTAIN WAGE RATE IS OFFERED BY THE MARKET. THIS RATE IS CALLED THE RESERVATION WAGE. AT RATES BELOW THE RESERVATION WAGE, HOUSEHOLDS WILL NOT SUPPLY LABOR. BUT WHEN LABOR IS SUPPLIED, THE QUANTITY WILL BE DIFFERENT AT VARIOUS LEVELS ABOVE THE RESERVATION WAGE. THE QUANITY OF LABOR SUPPLIES AND HOUSE HOLDS IS MODEFIED BY TWOOFF SETTINGS EFFECTSS OF A HIGHER WAGE RATE: (1) THE SUBSTITUTION EFFECT, AND (2) THE INCOME EFFECTS. SUBSTITUTION EFFECT. Household will naturally provide some time for nonmarket activities. If there is an increase in wage and they feel that returns they get from doing nonmarket activities are lower, they will tend to switch over some hours to market activity. This move is called the substitution effect. For example, a household needs to repaint its house and a laborer can be hired to do it in one day at P250. If the household is working and earning P200 per day, the household will do the repainting of the house. If the households wage rate is P300 per day, s housepainter will be hired. The higher wage rate motives the household to spend more time in a market activity which comes from the time deducted on those spent on a nonmarket activity Income effects. When the households 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 reduce the time available for pursuing a market activity. This will result to reduction of the quantity of labor supplied in the market this move is triggered by the income effect.
The backward bending labor supply curve. The supply curve discussed in a previous chapter is applicable to labor supply only up to a certain point. As describe above, labor supply tends to increase as a wage rates rise, and that is very topical of the supply curve. But when households begin to have sufficient income, labor supply tends to decrease. Stated simply. Wage earners reduce the time they spend for work when they receive higher wages. This action bends the labor supply curve backwards, A shown in figure 50. The demand for labor Labor, as previously mentioned, is a factor of production that is required by business firms, business firms, then, are the source of demand for labor. The 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, however, will depend on the real wage rate. The real wage rate The real wage rate refers to the 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 for work. Even if the nominal wage rate increases yearly, its real value will be smaller is the inflation rate is higher than the yearly increases in nominal wage rates. To illustrate, the following example is provided : The nominal wage rate in the year 2000 was P200 per day and P210 in 2001. If prices of commodities increased by 5% from 2000 to 2001, the real wage rate remains unchanged if year 200 was used as base year. The real wage rate maybe deternined by using the following formula:
Thus, if nominal wage is P210 per day and index number is 1.05(or 1.0 plus inflation rate) Then, Real Wage Rate = P210/1.05=P200. The labor demand curve Labor is a factory that is bought just like any commodity. It has a price, and the quantity demanded depends on the price. To the business firms buying this factory, the price is the real wage rate increases, the quantity demanded of labor decreases, and vice versa. An illustration is provided in a sample labor demand schedule (table 37). This schedule is dawn in a graph in figure 51. The schedule shows that when the real wage rate is P250 per day, the quantity of labor demanded is 1 million days a year. When real wage rate is decreased to P220 per day, the quantity of labor demanded is increased to 1.25 million days per year. PROBLEMS OF LABOR Labor is a very important factor of production, but it is beset by some problems that deserve serious consideration. The problem areas concerning labor are as follows: 1. unemployment and underemployment
2. inadequate wages 3. industrial and labor management conflict 4. economic insecurities. Unemployment Unemployment occurs when a person who is of working age(at lest 15 years old), is willing and able to work but cannot find work. Willingness to work is an important requisite for unemployment to be properly recognized. This so become these are some persons who would not want to work even if jobs are offered to them. Unemployment is an economics problem with undesirable social consequences. When unemployment is high, social pays high price in the form of the following. 1. lost output and income 2. depreciation of human capital 3. increase in crime 4. loss of human dignity. Output and income lost. When willing and able workers do not find employment , they are deprived of income and the economy does not benefit from the output they could have produced. This is especially disturbing when there are available jobs, and business firms could hardly cope with the demand for their product. It is unfortunate when jobless worker do not know that job opportunities exist. When this happens, wages for workers and profits for business firms are forever lost. Depreciation of human capital. The capability to work is referred to as a persons human capital. Education and acquired skills constitute human capital. The mechanical and mental skills, work habits, and concentration ability are acquired in school and in the job. When a person is unemployed, he loses the chance to practice his skills and when this happens for a prolonged period, the persons human capital depreciates. It will require a long period of training and familiarity with the job before he can regain what is lost, assuming that he can still be trained. Increases in crime. Unemployed persons who have families to feed or just plainly ha be nothing else to do sometimes turn to crime as a way of having money or something to do. It is not hard to understand, therefore, that high unemployment result to high crime rate. The peace and order problem that has always beset Mindanao is an example of the effect of lack of source of income for many residents in the area. Underemployment Underemployment occurs when a person works either part time but which in both cases receive very little pay. Underemployment person are not fully utilized by society. Villegas contends that the underemployment is the person who holds a job below what he is qualified for and below the occupation level he aspires for thus, a college graduate working as a housemaid is underemployed. Causes of underemployment
There are various causes of unemployment. Tullao, Jr., present four general factor which lead to unemployment. The causes, when roughly translated (tullaos book is written in filipino) are as follows: 1. rapid growth of population 2. slow growth of the economy 3. technology used 4. lack of skills. Rapid Growth of Population. A countrys population may grow faster than job opportunities do. When this happens, unemployment is expected. The faster the population grows, the higher the unemployment rate becomes. Rapid population growth brings social and economic problems, and one of these is unemployment. Slow Growth of the Economy. Another cause of unemployment is slow economic growth. This come as a result of economic policies implemented by the government. When inflation becomes a serious concern, for instance, the government tries to control it by mopping up excess liquidity. This means money in circulation will be reduced. The effect is that there will b less supply of money and those who need it will bid for it even at high interest rates. Many firms will be discouraged to invest when interest rates are high. Less investment will, then, be translated to less demand for the various factors of production including labor. Technology used. Countries with inadequate labor resort to the technology solution. Modern ways that are not labor intensive are used to produce goods and services. When this technology is used in countries like the Philippines, may people will be unemployed. Lack of Skill. One of the causes of unemployment is the mismatch between job requirements and skills available this is, oftentimes, the result of lack of education or poor education received from substandard schools. The continuous in flow of modern technology and equipment further aggravates the problem of inadequacy of skills in the labor force. Types of employment Unemployment may be classified into the following types; 1. 2. 3. 4. Seasonal unemployment Frictional unemployment Structural unemployment Cyclical unemployment
Seasonal unemployment. There are some jobs that are seasonal in nature. For instance, there is a great demand for farm workers during planting and harvesting season. In between the seasons and cropping, most farm workers are idle. Also, during off-seasons, most workers in resorts and other establishments catering to tourists are out of work. Frictional Unemployment. A person may get dissatisfied with his job, resigns, and starts looking for a new one. He may spend a few days or weeks before he can find a suitable replacement. Those days that he is not yet working is called frictional unemployment. A new graduate who spends a das looking for a job is also experiencing frictional unemployment. Constructional workers who are contracted on a daily basis suffer frictional unemployment on days that they are not needed.
Structural Unemployment. Structural unemployment happens when there are available and willing workers but their skills and training are not those required by the business firm. When a typist is laid off from her job and cannot apply for the only job available (that of the night singer), she is structurally unemployed. Cyclical Unemployment. When the demand for workers is less than the supply, some will be unemployed this conditions is called cyclical unemployment. This happens when economy is subject to business cyclical characterized by alternating period s of prosperity (when there is great demand for the various factors of production including labor) and depression (when demand for the same factor is lower). These downturns in demand force some workers to be out of work. They become victims of cyclical unemployment. Inadequate Wages Inadequate wages have become a perennial problem of labor. Wage is inadequate if it fails to meet the basic needs of the workers family. The possible causes of inadequate wages are as follow; 1. 2. 3. Inflation Lack of skill Too many dependents
At the start of the employment, wages may just be sufficient to take care of the basic necessities like food, clothing and shelter. When prices of commodities rise, however , and no corresponding increase in wages is provided, the worker will feel pressured and his work may be affected. Sometimes, workers are not able to get jobs that pay well because they lack the required skill. Most often, wage become inadequate because the workers are supporting too many dependents. They typical Filipino family consist of between six and seven members, and only one pressure on the sole breadwinner Industrial and Management Conflict Strikes and lock out a are actions that bring misery to both the employers and workers. In both cases, the worker is deprived of wage and employers of profits. Sometimes, strikes and lockout result to physical harm and death to some people. Even customer and the companys suppliers are also affected. When done on a large scale, strikes and lockouts can wreak havoc on developing economies like the Philippines. Economic Insecurities Workers worry having a permanent source of income. They are much concerned about layoffs and dismissals, illnesses, accidents and even death. They need funds to take care of their needs when such things happen to them and their families. Advanced countries have provided solution like free medical care and unemployment insurance. The Philippines, however, has still a long way to go in helping its workers feel secure in their jobs and in their homes. INVESTMENTS IN HUMAN CAPITAL To attain acceptable levels of employment, effort are undertake to improve human capital. This is done in two ways: education and training . education is provided to the individual usually before employment. The exception is when the person gets enrolled in a school even after getting a job. Training is done when the person is already working. education and training involves an initial cost, called the investment and each yield an expected return in future
year. This simply means that both are made to improve the persons ability to work. The expected result are higher output and income for both the labor and business firms. When an eligible worker is studying, he spends time and money that could have been used in working. Those who work, instead of going to college, get to receive incomes at an earlier stage compared with the college graduates. When the graduate start working, however, they tend to receive higher incomes. This relationship is shown in figure 52