Labour Intensive Technique | What is Labour Intensive Technique (Capital Savings)?

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Hi friends, in today’s article we are going to know about Labour Intensive Technique, merits and demerits. So let’s discuss in details.

Labour Intensive Technique With Diagram

Labour intensive techniques (capital savings) is one in which larger amount of labour is combined with a smaller amount of capital. It is also known as capital saving technology. We can explain labour intensive technology through the following figure –

Labour Intensive Technique | What is Labour Intensive Technique (Capital Savings)?
In the above figure, OK amount of capital and OL amount of labour produces the output level represented by IQ. But as the level of production increases, isoquant shifts upward to IQ1. Here amount of labour increases from OL to OL1 but the amount of capital remains the same or constant. Thus the production technology becomes labour intensive.

Merits of Labour intensive technique

  • The use of labour intensive techniques increases more job opportunities.
  • The labour intensive technique saves source of capital in the UDCs.
  • labour intensive techniques uses domestic resources and materials.
  • The use of labour intensive techniques decentralizes the economic power.

Demerits of labour intensive technique

  • With the help of labour intensive techniques we can not produce quality products.
  • The use of labour intensive techniques increases the cost of production
  • With the help of labour intensive techniques we can not produce economic surplus.
  • The labour intensive techniques does not increase productive capacity and the production unit.

Conclusion

So friends, this was the concept of Labour Intensive Techniques. Hope you get the full details about it and hope you like this article.

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