Factors of Production

FACTORS OF PRODUCTION

• Four factors:
  • Capital: Money and equipment to operate a business.
    • Borrowed capital: Money borrowed, to be paid back with interest.
    • Own capital: Your own invested money.
  • Labour: The workforce, their skills and levels.
    • Unskilled: Requires no high-level skill.
    • Semi-skilled: Requires some skill and training.
    • Skilled: Requires a high level of skill and thorough training.
  • Land: Natural resources (land, water, soil, air, plants, minerals, animals).
  • Entrepreneurship: Brings all factors together and puts them into action.

The role of workers in a business

• Human capital: Knowledge and skills workers gain.
• Workers bring ideas and creativity; they gain experience and grow professionally.

Fair employment practices

• Focus on good labor relations between employers and employees.
• South African laws:
  • Labour Relations Act: Promotes social justice and democracy in the workplace.
  • Basic Conditions of Employment Act: Regulates working hours, leave, pay, and retrenchment conditions.
  • Occupational Health and Safety Act: Ensures businesses don't damage employees' health.
  • Compensation for Occupational Injuries and Disease Act: Specifies compensation for employees who become sick, injured, or die while doing their job.

REMUNERATION OF THE FACTORS OF PRODUCTION

• Remuneration: Payment for work done or services provided.
  • Land: Rent
  • Labour: Salaries or wages
  • Capital: Interest
  • Entrepreneurship: Profit