Labor cost refers to the sum of all direct and indirect expenses paid by enterprises for production, operation and provision of labor services in a certain period of time.

brief introduction

The labor cost of an enterprise is often considered as the expenditure of wages or wages and benefits, but it is not.

First of all, labor costs are not equal to wages. Labor cost refers to the sum of all direct and indirect expenses paid by enterprises for production, operation and provision of labor services in a certain period of time. If the enterprise pays employees 1000 yuan, then the labor cost will never be direct 1000 yuan, and there are other indirect expenses.

Secondly, the labor cost is not equal to the total wages. Some people say that since wages are not equal to labor costs, is the total wages equal to labor costs? Of course not. According to the document number 1997, no labor department 26 1, labor costs include total wages, social insurance expenses, welfare expenses, education expenses, housing expenses and other labor costs.

Thirdly, the labor cost is not equal to the use cost. From the classification of human resources, human cost can be divided into acquisition cost, use cost, development cost and turnover cost, which shows that "use cost" is only a part of human cost. Some people often regard labor cost control as a "zero-sum game" between employers and employees, but it is not.

Labor cost control can be expressed by the following three inequalities:

1. Controlling labor costs does not mean reducing labor costs.

2. Controlling labor costs does not mean reducing employees' income.

3. High employee income does not mean high labor costs.

Labor cost control

Simply put, controlling labor costs is not to reduce the absolute value of labor costs, because the absolute value will inevitably increase with the progress of society. Therefore, controlling labor costs is to reduce the proportion of labor costs in total costs and enhance the competitiveness of products or services.

The control of labor costs should reduce the proportion of labor costs in sales revenue and enhance the ability to pay employee costs; The control of labor cost is to reduce the proportion of labor cost in the added value of enterprises, that is, to reduce the labor distribution rate and enhance the ability of human resource development.