Cost of Labour Turnover


There are two types of costs

i)                    Preventive cost and

ii)                  Replacement costs

And amenities to the workers that they may be tempted to continue at their job in the factory and not to leave it for example:


i)                    Personnel Administration: Only that portion of the cost of this department which is related  to the maintenance of good relationship between labour and management.

ii)                  Medical Services-Preventive as well as curative.

iii)                Welfare activities and services.

iv)                Miscellaneous schemes and benefits, e.g., Provident fund scheme, Pension scheme, Bonus incentives schemes, etc.


The replacement costs are those incurred to recruit new workers and also the costs consequent or incidental to replacement, for example:

(i)     Cost in selection and appointment

(ii)   Training cost

(iii) Loss of output due to delay in recruitment workers

(iv) Cost of inefficiency of new workers

(v)   Cost of breakage of tools and machinery

(vi) Cost of increased spoilage and defectives

(vii)                       Cost of frequent accidents


The treatment of Prevention and Replacement costs is to charge them as overhead and apportion to the different departments in the ratio of other workers.

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