Labour Intensive

  • Food processing
  • Hotels and restaurants
  • Fruit farming
  • Hairdressing
  • Coal mining Labour costs are higher than capital costs Costs are mainly variable = lower breakeven output Firms benefit from access to source of low-cost labour

Capital intensive

  • Oil extraction and refining
  • Car manufacturing
  • Web hosting
  • Intensive arable farming
  • Transport infrastructure Capital costs are higher than labour costs Costs are mainly fixed = higher breakeven output

Capital Intensity


  • Greater opportunities for economies of scale
  • Potential for significantly better productivity
  • Better quality & speed (depending on product)
  • Low labour costs


  • Significant investment
  • Potential for loss competitiveness due to obsolescence
  • May generate resistance to change from labour force

Luddite: A term used for workers afraid that technology and automation will take their jobs.

Labour Intensity


  • Unit costs may still be low in low-wage locations
  • Labour is a flexible resource—through multi-skilling and training
  • Labour at the heart of the production process—can help continuous improvement


  • Greater risk of problems with employee/employer relationship
  • Potentially high costs of labour turnover
  • Need for continuous investment in training