2. INTRODUCTION
The human effort needed for the conversion of raw materials in to finished product is called
labour.
Labour is divided in to
Direct labour – which is directly engaged in the production of goods and services
Indirect labour- which is not directly engaged in the production of goods and services
3. LABOUR COST
Labour costs are associated with human beings. It is an important element of cost. It also forms
significant part of prime cost and total cost. There are two types of labour cost.
Direct labour cost – cost of labour expended in altering the construction, composition or
condition of the product.
Indirect labour- amount of wages paid to workers who are not directly involved in altering the
composition of the product.
6. LABOUR TURNOVER
Labour turnover may be defined as change in labour force i.e., percentage of change in the
labour force during a specified period.
High labour turnover indicates that labour is not stabilized and there are frequent changes by
way of workers leaving the organization.
Low labour turnover indicates inefficient workers are being retained in the organization
7. CAUSES OF LABOUR TURNOVER
PERSONAL
CAUSES
UNAVOIDABLE
CAUSES
AVOIDABLE
CAUSES
8. PERSONAL CAUSES OF LABOUR TURNOVER
Circumstances of family
Retirement
Change in marital status
Dislike for the job
Death of the employee
Employee getting recruited in a better job
Permanent disability due to accident
Involvement of employee in activities of moral turpitude
9. Unavoidable causes
Termination of workers on account of inefficiency
Discharge of workers on account of irregularity or long
absence
Retrenchment on account of shortage of work
10. Avoidable causes
Non- availability of promotion opportunities
Dissatisfaction with incentive schemes
Unhappy with remuneration
Unsuitable to job due to wrong placement
Unhappy with working conditions
Non availability of accommodation, health and recreation facilities
Lack of stability of tenure.
11. EFFECTS OF LABOUR TURNOVER
Reduction in output due to change in labour force
Increase in cost of production due to newly recruited employee who may be lack expertise
and skill
Newly recruited employee may be unfamiliar with the work and may cause increased loss
of raw materials. Defectives, scrap and spoilage increases the cost of production
Inexperienced workers may cause more damage to tools and machinery
Non- availability of suitable employees may disrupt flow of production.
12. METHOD OF MEASUREMENT OF LABOUR
TURNOVER
Labour turnover under SEPARATION METHOD
Number of employees left the organization during a period
Labour turnover =__________________________________________________x 100
Average number of employees during a period
Labour turnover under REPLACEMENT METHOD
Number of employees Replaced during a period
Labour turnover =__________________________________________________x100
Average number of employees during a period
Number of separations during a period
Labour turnover =__________________________________________________x 100
Average number of employees during a period
OR
13. METHOD OF MEASUREMENT OF LABOUR
TURNOVER
Labour turnover under FLUX METHOD
Number of employees left + Number of employees recruited during a year
Labour turnover =__________________________________________________x100
Average number of employees during a period
OR
Number of Additions + Number of separations during a period
Labour turnover =__________________________________________________x100
Average number of employees during a period
14. METHOD OF MEASUREMENT OF LABOUR
TURNOVER
Labour turnover under ADDITIONS METHOD
Number of Additions during a period
Labour turnover =__________________________________________________x100
Average number of employees during a period
15. REMUNERATION AND INCENTIVES
TIME RATE
Under this method the workers are paid on the basis of hourly, daily, weekly and monthly
rate.
VARIANTS OF TIME RATE
16. PIECE RATE SYSTEM
Under this system workers are paid on the basis of output produced by them.
VARIANTS OF PIECE RATE
