Labour as a factor of production

Labour as a factor of production is defined as both physical and mental effort of man directed to production.

Labour also refers to all human effort which may be physical or mental, skilled or unskilled, scientific or artistic, using the productive process usually for a reward. It is one of the variable factors of production. The reward for labour is a WAGE OR SALARY


  1. Unskilled labour
  2. Semi- skilled labour
  3. Skilled labour


  • Labour is a human factor of production
  • Labour is mobile
  • Labour is not fixed
  • Labour cannot be stored like capital
  • Labour requires motivation
  • It is variable in supply
  • Labour can be skilled through training
  • The reward of labour is wage or salary.


  1. Labour provides the necessary man power or personnel required for the production of goods and services
  2. It is an active factor of production
  3. Labour is required in industries to operate machines and carry out the various production process.
  4. It influences other factors of production actively. Labour plays an active role on other factors of production because without labour, land and capital will remain idle.
  5. Labour helps to produce goods and services for people’s consumption.


Efficiency of labour is the ability of labour to attain higher level of output with a reduction in the quality of output. It is referred to an increase in productivity per labour employed.

Efficiency of labour is enhanced by the level of education and training.


  • Education and training
  • Provision of welfare services
  • Improved working conditions
  • Job security
  • Availability of necessary equipment and tools
  • Technological improvement
  • Improvement in health facilities
  • Quality of other facilities
  • Application of division of labour and specialization
  • High wages or salaries
  • Promotion
  • Climate conditions
  • Effective and efficient management

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