The Labour Forces of the Preindustrial and Industrial Ages - Essay Example

The Labour Forces of the Preindustrial and Industrial Ages Roll No: Teacher: 21st March 2009 The Labour Forcesof the Preindustrial and Industrial Ages Labour market is an integral part of any economy at all times. Labour market has evolved over time. Primary characteristics of labour force have changed over the years. If one looks at the historical development of labour force of any country, it will be noticed that characteristics of labour force have started to change in a significant way since the industrial revolution. It would be therefore interesting to examine labour force characteristics in pre-industrial and industrial period. This paper seeks to make a comparison between pre-industrial labour force and industrial labour force. For conducting the comparative analysis, the era prior to industrial revolution has been considered as pre-industrial age, whereas the period starting since industrial revolution has been considered as industrial age. Before embarking on making any comparison between the pre-industrial labour force and industrial labour force, it is necessary to look at the major features of labour market of pre-industrial age as well as that of industrial age to form a clear idea about the features of labour force during these two periods. Characteristics of labour market at any point of time can be viewed in terms of labour force composition, production process, division of labour, labour market institutions, wage structure, etc. The present paper will first discuss the major characteristics of labour market in the two periods under consideration, which are preindustrial era and industrial era. Labour force composition In the pre-industrial period, economies were mostly dependent on agricultural sector and to some extent on home based industries, like manufacturing, construction etc. Industrial sector did not flourish on a commercial basis largely. There existed only a few industries, which ran their business on a commercial basis, like iron or textile industries, etc. Consequently, most of the labourers were agricultural labourers or were employed in home based industries. Labourers mostly concentrated on rural areas, because during that period the notion and extent of urbanization was very limited. As far as, gender perspective in labour force participation was concerned, it was found that males mostly dominated that labour market. Female participation in the labour force was very low. In this context, one interesting thing can be mentioned that in pre-industrial era, women used to be involved in doing household activities even because most of them belonged to very poor families. In addition, more earning members were required to meet the daily needs of living (Hudson 1998). Division of labour In pre-industrial era, division of labour was very limited. Prior to industrial revolution, division of labour was mainly intra-firm or intra-sectoral type. However, after industrial revolution, with expansion of industries, division of labour started to take a different form. In the industrial age, inter industry division of labour was more likely to be observed. In the industrial era, labourers were seen to grow with specific skills suitable for particular industry types. However, intra firm division of labour was also present in the industrial period. Intra firm division of labour was dependent on the level of competency for different tasks at managerial level as well as at production level (Hudson 1998). Labour market institutions In the pre-industrial period, labour market institutions, like trade union, producers’ union etc., were not so developed. These unions did not possess much power, and therefore they played little role in the process of recruitment or in wage determination. However, in the industrial era, different labour market institutions started to acquire immense power, particularly trade unions of labourers. These unions started to play important role in the process of recruitment as well as in wage determination through the process of collective bargaining. The more powerful the trade union became, the more favourable was the wage rate of labourers. Therefore, in the industrial era labour market institutions were of great significance (Hart and Moutos 2008). Production processes In the pre-industrial era, production was mainly labour-intensive. Apart from this, another striking feature of the production system was that it mainly relied on physical power of the labour force. Human capital was not given much importance, and therefore, skill requirement for increasing productivity was less. Production process also used primitive techniques, which were not very favourable in increasing productivity of the labourers. However, after industrial revolution, more importance was given to human capital rather than physical power. Therefore, level of education and different sorts of technical skills were recognized as major criteria for getting any job (Hudson 1998). The economy was moving towards a free market and comprised a minimum interference of government (Block 1990). Wage structure in labour market During the pre-industrial period, wage structure used to be very rigid. Many people are of the opinion that during pre-industrial era, culture and customs used to influence wages of the labourers greater than the market. Labourers had very little market power. They usually did not posses any power to demand for higher wages even if there had been shortage of labour supply. As a result, functioning of market became one sided and wages had a tendency to always be at or near subsistence level. If one takes a quick glance on the trend of nominal wages of labourers in pre-industrial period, one can find that nominal wages were extraordinarily sticky, that is, nominal wages remained fixed at some particular level for a long time, around a century. It simply implied that nominal wages of the labourers did not show any tendency to vary with change in the cost of living of the labourers. Not only the nominal wages were fixed at a certain level, the level skill premia was also fixed. Skill premia can be defined as the ratio of skilled workers’ wages to unskilled labourers’ wages. Constant skill premia over a long period simply meant that in pre-industrial era, labourers did not get any improvement in their payment with increase in their skills beyond the level of fixed skill premia. The real wages, therefore, were completely dependent on cost of living, i.e. prices, rather than nominal wages. The prices, on the other hand, were determined by the demographic pattern of population. Therefore, real wages were ultimately dependent on Malthusian forces. Labourers, therefore, stood powerless in front of these fundamental factors. Situation, however, changed or improved since industrial revolution. Industrial revolution brought about several changes in the labour market. Wage structure also started experiencing huge changes. Rigidity in wage rate started to disappear. In the industrial era, wage rate became more flexible and market power started to influence wage rate in a significant way. Skills started to be recognized and rewarded in greater way. Increase in skill was followed by increase in remuneration, which in turn provided huge incentives to the labourers for augmenting skills (Grantham and MacKinnon 1994). Because of the above-mentioned characteristics of labour market in the pre-industrial era and industrial era, it is now possible to compare the labour force between the two periods. Prior to industrial revolution, labour force was composed of mainly agricultural workers, be it in form of cultivators or agricultural labourer. More than 90 percent of total labourers in most of the countries belonged to agricultural sector. Labourers mostly concentrated on rural areas, as urbanization still had no or minimum momentum. During pre-industrial era, urbanization was taking place at a very slow pace due to lower industrial growth. Industrial sector did not flourish at a large extent, so, less number of labourers migrated to urban areas with an expectation of higher wages. Urban-rural wage gap was very low prior to industrial revolution; hence, incentive to move out of rural agricultural sector was also very low. Apart from this, there is one very important distinction in the labour force composition of the two periods under consideration. During pre-industrial era, participation of females in the labour force was relatively insignificant compared to the industrial era. Since the advent of industrial revolution, women were to participate in labour market in a larger scale. Earlier women participated as casual labourers in most of the cases. Nevertheless, with time situation improved. With the expansion of industrial sector, women started to participate in the labour market as regular salaried workers at higher proportions. Women even started entering the core management areas in greater numbers. Another interesting thing to observe regarding the women participation is that in the industrial era, participation of married women in the labour force increased dramatically, while in the pre-industrial era, married women usually assumed the role of homemaker with the principal responsibility of bearing children. For example, in U.S. around 61.3 percent of married women participated in the labour market (Ruiz 1998). As far as division of labour in concerned, labour force used to be divided in a straightforward way among different areas of production within a firm or within an industrial sector during pre-industrial period. Nevertheless, with the expansion of industrial sector with setting up of various types of industries, division of labour became more complicated. In the present era, a worker usually specializes in one particular area of one particular industry, or in one particular area that can be applicable in any kind of industry. Hence, division of labour has become more complicated with so many areas to be taken into account for the purpose of specialization (Hudson 1998). As compared to pre-industrial era, labour market institutions, especially workers’ trade unions have become very strong, and they are very active in securing jobs of the employees, bargaining with management in case of the determination of wage rate, protecting labourers from exploitations and so on. In the presence of collective bargaining, wage rates are no longer fixed and are independent of cost of living. Nominal wage rate has become responsive to price changes. Therefore, majority of workers no longer live at the subsistence level. If the opposite happens and the employer negotiates at an individual level then the average rate would come down (Hart and Moutos 2008). In the area of production, skill has become an important factor. Therefore, labourers are increasingly investing on human capital to augment their skills, as, better possession of skills is supposed to pave the way for recruitment at desired level and makes a significant hike in the salary. Therefore, industrial era has more skilled labour force as compared to pre-industrial era and hence labour productivity in the industrial era is also higher than in pre-industrial era (Hart and Moutos 2008). References Block, Fred. Post-Industrial Possibilities: a critique of economic discourse. Berkeley, CA: University of California Press, 1990. Ruiz, Vicki L. From Out of the Shadow: Mexican American Women in Twentieth- Century America. New York: Oxford University Press, 1998. Hart, Robert A. and Moutos, Thomas. Human Capital, Employment and Bargaining. Cambridge: Cambridge University Press, 2008. Grantham, George and MacKinnon, Mary. Labour Market Evolution: The Economic History of Market Integration, Wage Flexibility and the Employment Relation. London: Routledge, 1994. Hudson, Pat. The Industrial Revolution. U.S: Oxford University Press, 1998. Read More