By efficiency of labour, we mean productive capacity of a worker. It indicates the capacity of a labourer to do more work or better work or both during a given time period. Other things remaining the same, if a worker produces more than other workers, he will be called more efficient.
Thus, the efficiency of labour has the following aspects:
(i) The quantity of output produced by a worker.
(ii) The quality of the product produced by a worker.
(iii) Time taken by a worker to produce that product. To sum up, the efficiency of a worker will be more, who produces more quantity of a better quality product in comparatively lesser time period. Thus, efficiency of labour is a relative concept. Benefits of Efficiency of Labour
(i) The quantity and quality of output produced by a worker increases.
(ii) Producer gets an opportunity to raise his/her income and hence the standard of living.
(iii) The time spent by a worker in producing that product reduces.
(iv) More efficient workers are able to earn more income in the form of wages.
(v) An increase in efficiency of labour reduces cost of production, thus efficient labour force is an important economic ingredient.
Differences between Capital and Labour
(i) Capital is a passive factor of production while labour is an active factor of production.
(ii) Capital can be separated from his owner while labour cannot be separated from labourers.
(iii) Capital is durable while labour is perishable.
(iv) Capital is mobile, while labour is comparatively less mobile.