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What is Labour Turnover in Cost Accounting?

labour turnover

Labour turnover is the number of employees who leave a company over a period of time, divided by the average number of employees during that period.

The turnover rate is usually expressed as a percentage. For example, if a company has 100 employees and 10 leave in a year, its labour turnover rate would be 10%.

labour turnover

Causes of Labour Turnover

Labour turnover can be caused by a variety of factors, including voluntary resignations, retirements, and terminations. It can also be affected by the business cycle. For example, turnover tends to increase during periods of economic growth as more people are hired than usual and more people leave to take advantage of better job opportunities.

There are a number of costs associated with labour turnover, including the cost of recruiting and training new employees. These costs can be high, so it’s important to try to minimise turnover. There are several ways to do this, including offering competitive salaries and benefits, providing good working conditions, and investing in employee development.

Some businesses view labour turnover as a necessary evil and accept that it will happen from time to time. Others see it as a problem that needs to be fixed. Either way, it’s important to understand the costs associated with turnover and take steps to minimise them.

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