labour intensive firm/industry

labour intensive firm/industry

a firm or industry that produces its output of goods or services using proportionately large inputs of LABOUR and relatively small amounts of CAPITAL.

The proportions of labour and capital that a firm uses in production depends mainly on the relative prices of labour and capital inputs and their relative productivities. This in turn depends upon the degree of standardization of the product, insofar as fragmented markets where consumers demand product variety are not amenable to the use of large-scale capital-intensive production methods that facilitate ECONOMIES OF SCALE. Clothing manufacture, plumbing and hairdressing are examples of labour-intensive industries. See BATCH PRODUCTION, CAPITAL LABOUR RATIO.

Collins Dictionary of Economics, 4th ed. © C. Pass, B. Lowes, L. Davies 2005