Labour as a Factor of Production


Welcome to class! 

In today’s class, we will be talking about labour as a factor of production. Enjoy the class!

Labour as a Factor of Production

factors of production

At the end of the lesson, you should be able to;

  • Distinguish Labour from other Factors of Production;
  • Identify and explain characteristics and types of labour
  • Evaluate the importance/value of Labour as a Factor of Production and in the production process.



It may be defined as all forms of human efforts both mental and physical efforts put towards the production of goods and services. It is one of the variables factors of production cannot take place without the utilization of labour. The reward of labour is in the form of wages and salaries.

  1. It is supplied by human beings.
  2. It is highly mobile.
  3. It is variable and unpredictable.
  4. It cannot be stored.
  5. Its ownership and use cannot be separated.
Types of labour

There are three common types of labour:

  1. Unskilled Labour: These are workers with little or no education who use only their physical energy in carrying out their work. E.g. messengers, cleaners, gardeners etc.
  2. Semi-skilled Labour: This category of labour is between unskilled and skilled labour. These are workers who have little education and training. They combined both physical and mental efforts in carrying out their work. e.g. typist, tailors, carpenters, drivers, clerks etc.
  3. Skilled Labour: This category of workers make use of their mental effort in production. This labour has undergone a relatively long and specialized type of training in institutions of higher learning. They usually hold administrative and managerial positions, e.g. accountants, lawyers, teachers, engineers involve the use of mental effort (brain) in carrying out the production process.
Importance of labour
  1. It provides the required skills needed for production activity.
  2. It influences other factors of production since without labour, capital and land will remain idle.
  3. It is required for the operation of the machine in the industry.
  4. It helps to produce goods and services.
  5. It is important for producing human effort required needed in the production of goods and services.


  1. Define labour as a factor of production.
  2. Mention three types of labour.
Efficiency of labour

The efficiency of labour means the ability of a worker to increase his output per hour without any loss in the quantity and quality of the goods produced. That is, it is the measure of the level of productivity of labour in terms of his optimum use of resources to produce goods within a given period without any loss in the quantity and quality of goods produced.

The major aim of all employers of labour is to get the maximum output from their workers and to get this, efforts are therefore made to keep them happy. This is what is being done by various employers of labour both in the public and private enterprises to increase the efficiency of their employees.

Factors affecting the efficiency of labour
  1. A moderate increase in the wages and salaries of workers.
  2. Provision of social amenities such as medical services, pipe-bone water, recreational facilities, electricity, canteen, etc.
  3. Provision of a better condition of services.
  4. Improvement in the working condition of workers.
  5. The efficiency of other factors of production.
  6. Level of educational attainment and training.
  7. Improvement in the level of technological development.
  8. Granting of encouragement in terms of incentives to workers.


  1. What is the efficiency of labour?
  2. Highlight factors affecting the efficiency of labour.

Reading assignment

Amplified and simplified Economics for SSS by Femi Longe Chapter 4 Pages 45- 49

Fundamentals of economics by R.A.I Anyanwuocha Chapter 4 Pages 25 – 26 Chapter 12 Pages 102 – 105 

General evaluation
  1. Differentiate between labour as a factor of production and land.
  2. What is meant by the term production?
  3. What are the contributions of land to economic activities in Nigeria?
  4. When is production said to be completed in economics?
  5. Itemize the names of five renowned economists.
  6. What will a producer of goods and services do to improve the efficiency of his workers?
  7. Briefly outline the uniqueness of labour as a factor of production


In our next class, we will be talking about Capital as a Factor of Production. We hope you enjoyed the class.

Should you have any further question, feel free to ask in the comment section below and trust us to respond as soon as possible.

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