Labour VS Capital Intensity

Labour intensity – product relies on using labour resources Capacity intensity – product relies on using capacity resources

Benefits of 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

Drawbacks of Labour Intensity

  • greater risk of problems with employee/employer relationship
  • potentially high costs of labour turnover (recruitment etc)
  • need for continuous investment in training

Textbook Exercise

  1. A
  2. B
  3. D
  4. A