Labour Efficiency

Labour Efficiency

Labour The efficiency with which a given number of employees produce goods and services, the productivity of labour, depends largely on the level of skill or training of the labour force and the distribution of labour and cooperating capital equipment among occupations and industries.

If labour were completely mobile between areas and occupations, movement from low productivity occupations paying low wages to high wage and productivity occupations would be induced by (and would tend to eliminate) wage differences. This movement of labour would be reinforced by a drift of new enterprise and capital to areas where the price of labour was relatively low. In practice, mobility of labour between occupations is limited by lack of education, training, experience and ability, and by the cost and difficulty of personal movement (which in turn may be partly due to Government policies on, for example, rent restriction). Immobility of both labour and enterprise capital may be aggravated by trade union restrictions, demarcation rules and regional or national wage agreements that reduce or exclude local wage differentials. These practices hinder the linking of unfilled vacancies with pockets of .php�>unemployment, reduce the incentive for new business to settle in low-wage areas, and so act as a brake on economic efficiency and growth. Some economists have argued that the power of trade unions must be strong in order to offset the superior bargaining power of employers, others that the trade unions should not impede the working of the market economy, some that they no longer need the legal privileges given by Acts of Parliament when theft bargaining power was weaker than in conditions of full employment.

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