Understanding Labor Cost: What Does It Include and Why Does It Matter?

Shringarika Srivastava
What is meant by labor cost and what are its components?

Shringarika
Rajat Joshi
Hi Shringarika,

The labor cost in the Indian context is essentially direct costs, which are wages paid by an employer to a worker, plus any other costs incurred by the employer. It also includes employer's social contributions, such as personal accident insurance, medical insurance, pensions, and provident fund. The other non-wage costs include sickness, maternity and paternity costs, vocational training costs, recruitment costs, Diwali gifts, and other benefits like rainy shoes, raincoats, uniforms, etc.

Regards,
Rajat
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