13Disadvantages (Demerits) of labour intensive technology
- It is associated with the production of poor quality products. Such products are not internationally competitive and they fetch low prices on the world market hence poor terms of trade for the country.
- It tends to be expensive in the long run. This is because it involves high costs of constant monitoring supervision of labour which in most cases is unskilled. In addition, it is associated with huge wage bill since it employs many people.
- It is time wasting as compared to capital intensive technique of production. This is because labour is naturally slow as compared to machines.
- It leads to excess capacity in production. This leads to low output due to underutilization of resources hence low levels of economic growth and development.
- It is not applicable in activities where massive capital outlay is required. For example in mining, construction, heavy manufacturing etc.
- It leads to poor standards of living. Labour intensive technology leads to the production of limited poor quality goods and services in the economy. This reduces the choice of consumers at high prices hence poor standards of living.
- Labour is associated with high degree of inefficiency and industrial un rests in form of constant demand for better working conditions and wages. This leads to low levels of production hence retarding economic growth and development.
- It worsens the balance of payment position of the country. Labour intensive technology leads to the production of poor quality goods and services for exports. Such goods fetch low prices on the world market hence low export earnings of the country.
- Labour is associated with high costs of education and training by cite government. This forces the government to borrow in order to educate and train labour hence increased debt burden.
- Over reliance on labour intensive technology may not promote skill formation due to limited inventions and innovations. This is because it may not promote research and development like in the use of capital intensive technology.
- It cannot be used to modernize and standardize output especially in the agricultural sector. Such output cannot meet international standards due to low value addition and poor standards.
- It is not appropriate in countries where labour is scarce and expensive. For example develop countries. This is because it may increase the costs of production in form of demanding for high wages:
- It is not appropriate in situations where there is need for huge market supply especially under international trade.
CATEGORIES Economics
TAGS Dr. Bbosa Science
Good sir