The efficiency of labor means the useful capacity of a worker. The working capacity of the labor is called his efficiency being given the saint time limit and given the same type of work. It has a very important bearing on the cost of production. It indicates the capability of the employee to do more work or enhanced work during a given period of time.
The factor determining the Efficiency of Labor –
(i) Personal Qualities: Some people have some personal qualities and they are suitably built for certain heavy labor. On the other hand, some people are very suitable for mental labor. Family background also plays a very important role in this regard.
(ii) Education: It is the basic and essential element which determines the efficiency of labor. An educated laborer is more efficient as compared to the illiterate worker.
(iii) Training and Skills: The modern world requires highly skilled laborers. A laborer with sound technical training will be more effective as compared to a laborer who has no training. It increases the efficiency of the laborer.
(iv) Climatic Condition: Climates also plays an important role in increasing or decreasing the efficiency. Hot weather has a vital factor for the low efficiency of labor in Asia and the Middle East. On the other hand, cold weather is an important element for increasing the efficiency in labor in U.S.A and Europe.
(v) Wages and Benefits: If wages, allowances, bonuses and other frigs benefits are given to the workers, then their Working efficiency increases. A laborer works very hard if he has an attractive salary. On the other hand, if wages rate is low then the efficiency of the laborer will be also low.
(vi) Combination of Production Factors: If the other three factors of production combination are ideal then the efficiency of laborer will be high otherwise low.
(vii) Working Hours: If working hours of the laborer are reasonable then the efficiency will be high. If the working time is very long and without extra payment, then the efficiency of the worker will be low.
(viii) Environment: If the working environment is pleasant then the efficiency of laborer will be high. It is observed that laborer working in air conditions rooms and health conditions are more efficient as compared to others.
(ix) Radical Qualities: By birth, some races are very hard working and strongly built so they are more efficient as compared to other races.