Labor is one of the four factors of production which are required for producing goods and services but labor is different from other factors of production in the sense that this is the most complex factor of production as this factor of production involves emotions and feelings which is not the case with other factors of production, and that is the reason why companies should be careful while dealing with this factor of production because the strong foundation of companies are not built on capital or land or entrepreneurship but is built on a strong and dedicated workforce. In order to understand more about the labor market one should look at the features of the labor market –
Labor Market Features
Highly Perishable
The first and foremost feature of labor is that they are highly perishable in the sense that once the day is passed and if labor remains unused than you cannot bring back the time and labor service for that day will be wasted. In simple words suppose a labor has sat idle for the whole day then next day company or employer cannot force him or her to do double days work resulting in wastage or perishing of full days work of the labor.
Defined Limit of Service
There is a limit beyond which labor cannot work even if the company is ready to pay any amount for their service because humans, unlike machines, get tired and after stipulated time of 8 or 10 hours they cannot work with the same efficiency.
Emotions Play its Part
In case of other factors of production emotions or feelings has no place but when it comes to labor than one can safely say that emotions play a very important role in the case of the labor market. Hence, for example, suppose one company is paying a good salary to its workers but work environment and treatment of workers is very bad and another company is paying less salary but it’s having a good work environment and they treat their workers well than workers will prefer the second company even if salary is less.
Each Labor is Different
Labor is not homogenous implying that no labor will be same each labor has different efficiency, work ethics, nature and so on and that is the reason why any company should keep in mind that each worker is different from each other and comparisons between labor results in undue stress between the workers as well as within the company.
Imperfect Market
A perfect market is when the price of good or service is same at all places but in case of labor market, this thing does not work as for the same type of work different wages are paid to different workers resulting in labor market being imperfect market. Besides even if a worker comes to know that in other city or area labor is getting good wage than also it is not easy to shift to that place because unlike capital which can be moved freely from one place to another labor as a factor of production cannot move from one place to another easily.
As one can see from the above characteristics of the labor market that labor is a complex factor of production and the company’s chances of success improve substantially once it learns to manage this important factor of production.