MEASUREMENT OF LABOUR TURNOVER, Study notes of Labor Management Relations

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MEASUREMENT OF

LABOUR TURNOVER

DEEPALI GUPTA SHIVHARE

MEASUREMENT OF LABOUR TURNOVER

Practice Questions

• Yo industries gives the following information:
• Number of employees on 1-1-19 = 200
• Number of employees on 31-12-19 = 240
• Number of employees resigned =
• Number of employees discharged = 5
• Number of employees replaced = 18
• Calculate the net annual turnover rate?

Second Practical question

• The Cost Accountant of Y Ltd. has computed labour turnover rates for the quarter ended 31st March, 2019 as 10%, 5% and 3% respectively under ‘Flux method’, ‘Replacement method’ and ‘Separation method’ respectively. If the number of workers replaced during that quarter is 30, find out the number of: (1) workers recruited and joined and (2) (2) workers left and discharged.

Cost of Labour Turnover

• Preventive costs:
• These include costs incurred to keep the labour turnover at a low level, i.e. cost of medical services, welfare schemes and pension schemes. If a company incurs high preventive costs, the rate of labour turnover is usually low.
• Replacement costs:
• These are the costs which arise due to high labour turnover. If men leave soon after they acquire the necessary training and experience of good work, additional costs will have to be incurred on new workers, i.e., cost of employment, training and induction, abnormal breakage and scrap and extra wages and overheads due to the inefficiency of new workers.
• It is obvious that a company will incur very high replacement costs if the rate of labour turnover is high. Similarly, only adequate preventive costs can keep labour turnover at a low level. Each company must, therefore, work out the optimum level of labour turnover keeping in view its personnel policies and the behaviour of replacement cost and preventive costs at various levels of labour turnover rates.