What type of labour are you? What capitals or
productive resources do you possess? What is the potency of your productive
resources? It is important that you consider these questions because their
answers have great impact on your life. It will determine whether you live a
life of perpetual struggle or that of constant achievement. To live a life of
achievement though, you need productive resources (or capitals). Capitals, of
course, are things we put in to create wealth. There are four factors that
determine our ability to create wealth. They are collectively called “factors
of production”. Factors of production encompasses all the resources and efforts
aimed at creating wealth (i.e. creating value or producing goods and services),
including the ones we have discussed so far. They are: Land, Capital, Labour,
and Entrepreneur. These can be further grouped into two broad categories,
namely: Capital and Labour.
Capital on the one hand, comprises of land
and other productive resources such as finance and material commodities that are
used to create wealth, while Labour on the other hand, is a collective term for
both labour and entrepreneur. We shall see the difference latter, but they are
the human factors of production that use their skills to work on the other
factors of production such as land and capital to create value or wealth. The
amount of wealth that can created depend largely on the competence of these two
human factors of production (i.e. Labour and Entrepreneur). Their competence
depends on their level of education or training. So if you have a large
competent workforce (labour), working on a large amount of capital (e.g. land,
money and material goods), then you are likely to have large returns on your investment.
Having incompetent workforce, working on your capitals is a recipe for
disaster. Now let’s see how all these factors of production contribute to
wealth creation.
FACTORS
OF PRODUCTION
Land
Capital
Labour
Entrepreneur
LAND
Land is the medium or space on which
production activities take place. No production can take place without land or
space. For example, farmers need large expanse of land to crow crops or rear
live stocks. Factories are located on land; offices and markets on which
business activities take place are also located on land. Even if you are
operating on an open space, that space on which you operate is land. You can do
nothing without land.
CAPITAL
Capital, simply put, is wealth
that is used to create further wealth. It could be a large amount of money
invested in or used to start a business. It could be capital goods like
buildings, machineries, tools or equipments used in producing more wealth. Hence
different things constitute capital to different people, depending on what they
do. For instance, besides money, a farmer’s capital includes his hoes,
machetes, machineries, and other farm implements as well as seeds and
seedlings. To a fisher man, his capital would include his net, fishing hooks,
baits canoe or boat etc. A tailor’s capital includes his scissors, sewing
machine, iron, cutting table, fabrics etc. In fact, any asset that one has that
can aid him in the production of further wealth is his capital. Thus there are
numerous tangible and intangible, acquired or naturally endowed assets that
are potent capitals for wealth creation. They range from physical strength,
knowledge and skill to experience, idea, status and even beauty... All the
factors of production are also capitals for investment.
LABOUR
Labour is the application of physical or mental effort of man in the
production of goods and services. It also refers to the people who make
themselves available for work. It is the people who work on other factors of
production such as land and capital to create value (e.g.to produce goods and provide
services). A labour gets his reward in the form of wages or salaries.
There are differences in the caliber of labour depending on the
level of education, training and experience. Hence, we have three types of
labour namely: unskilled, semi skilled, and skilled labour.
UNSKILLED LABOUR
This is the application of physical effort of man in the
production of goods and provision of services. The work done by unskilled
labour requires little or no education or training. Example of unskilled labour
include: local security men, cleaners, petty traders, house helps, small scale
stone and sand miners, those who earn a living by bush or grass clearing,
fetching or splitting of firewood etc. The income accruing to an unskilled
labour is often very small.
SEMI-SKILLED LABOUR
This is the category of workers who
combine both physical and mental effort in their work. Workers in this group
are people with little education or training. For example, clerks, SSCE, GCE,
and NECO holders. Others are craftsmen or artisans who have received proper
training in their chosen vocation such as carpentry, welding, electronics,
computer operation, cookery, etc. They are often paid better than the unskilled
labour.
SKILLED
LABOUR
This are
highly educated professional workers whose intellects are highly developed
through years of advanced studies. Hence they use largely mental effort in
carrying out their own part of the production process. They are professionals,
products of tertiary institutions such as the university and the different professional bodies such as COREN, NBA, NMA etc. Example, doctors,
lawyers, engineers, architects, accountants, economists, surveyors etc. They
are better remunerated than the semi-skilled labour.
ENTREPRENEUR
The
entrepreneur is the factor of production that organizes and coordinates other
factors of production in the process of producing goods and services or
creating value. The entrepreneur is the one who provides the capital for
establishing and running the business. He also controls and manages the other
factors of production --- land, labour, and capital--- to ensure
efficiency and maximize profit. The success or failure of a business depends to
a large extend, on the competence of the entrepreneur.
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