Employment is a relationship between two parties, usually based on a contract where work is

paid for, where one party, which may be a corporation, for profit, not-for-profit organization, co-
operative or other entity is the employer and the other is the employee.

Labor refers to the exertion of human effort to acquire an income. Human effort includes physical
and mental exertion. Many people use their brawn and muscles to earn a living.

Characteristics of labor:

1. Labor is perishable - Labor that is wasted is lost forever.

2. Labor and the individual are inseparable A man working for wages cannot separate his
physical self from his labor if he wants to enjoy the comforts of another room.
3. Labor supply does not change quickly The supply of labor increases steadily as
population grows.
4. Most employable persons do not like to move Even if the demand for labor is higher in
some places, many people still prefer to remain unemployed.

Kinds of labor:

1. Manual labor This type of labor mostly involve the exertion of physical effort specifically
the use of brawn and muscles.
2. Clerical labor This type is considered as next higher in order than manual labor. Although
most parts of the clerical work are done with physical effort, the exertion is not as great as
that in manual labor.
3. Professional labor The job of the professional requires a higher degree of intelligence than
those of the clerks.
4. The labor of Management Managers of all kinds and types perform functions which may
be referred to as labour of management.
5. The labor of Entrepreneur The entrepreneur is one who organizes the business and sees
to it that the business becomes stable. What the entrepreneur thinks is best for the business is
relayed to the managers for execution.
6. The labor of inventors - A very important ingredient of economic development is the output
of the inventors.

Problems of labor:

1. Unemployment and under employment

2. Inadequate wages
3. Industrial and labor- management conflict
4. Economic insecurities

I. Unemployment - Occurs when a person who is of working age (at least 15 years old), is
willing and able to work but cannot find work.

When unemployment is high, society pays as high price in the form of the following:
 1. Lost output and income When willing and able workers do not find employment, they are
deprived of income and the economy does not benefit from the output they could have
produced.
2. Depreciation of human capital When a person is unemployed, he loses the chance to
practice his skills and when this happens for a prolonged period, the humans capital
depreciates.
3. Increase in crime - Unemployed persons who have families to feed or just plainly have
nothing else to do sometimes turn to crime as a way of having money or something to do.
4. Loss of human dignity- When persons suffer loss of employment for long periods, most of
them lose their self-esteem as well.

Underemployment- occurs when a person works either part-time or full-time but which in both
cases receive very little pay. Underemployed persons are not fully utilized by society.

Causes of Underemployment:

1. Rapid growth of population - The faster the population grows, the higher the
unemployment rate becomes. Rapid population growth brings social and economic
problems.
2. Slow growth of the economy This comes as a result of economic policies
implemented by the government. When inflation becomes a serious concern, for instance,
the government tries to control it by mopping up excess liquidity.
3. Technology used Countries with inadequate labor resort to the technology solution.
4. Lack of skills the continuous inflow pf modern technology and equipment further
aggravates the problem of inadequacy of skills in the labor force.

Types of Unemployment:

1. Seasonal unemployment There are some jobs that are seasonal in nature.
2. Frictional unemployment- a person may get dissatisfied with his job, resigns, and starts
looking for a new one.
3. Structural unemployment- structural employments happens when there are available
and willing workers but their skills and training are not those required by business firms.
4. Cyclical unemployment- when the demand for workers is less than the supply, some will
be unemployed.

II. Inadequate Wages

- Inadequate wages have become a perennial problem of labor. Wage is inadequate if
it fails to meet the basic needs of the workers family. The possible causes of
inadequate wages are as follows:
1. Inflation
2. Lack of skills
3. Too many dependents
III. Industrial and labor- management conflict- strikes and lock outs are actions that
brings misery to both the employer and workers. Sometimes, strikes and lock outs result to
physical harm and death to some people
IV. Economic insecurities- workers worry about having a permanent source of income. They
are much concerned about layoffs and dismissals, illnesses, accidents and even death.