Volume 4, issue 8, 2025
44
THEORETICAL ASPECTS OF UTILIZING LABOR POTENTIAL IN SMALL
BUSINESSES
Turginova Mavludahon Makhammadjanovna
Assistant of the "Economics" Department
Andijan State Technical Institute
Abstract:
This article examines the theoretical foundations of the concept of labor potential and
its effective use in small business conditions. Key factors influencing the formation and
development of labor potential, as well as the specifics of its application in small businesses, are
highlighted. Special attention was paid to the experience of the Republic of Uzbekistan,
including statistical analysis of employment and labor productivity in the small business sector.
Keywords:
labor potential, small business, employment, productivity, human resources,
entrepreneurship, economy, Uzbekistan.
Introduction
In the current conditions of market economy development, the human factor is becoming a key
element of enterprise competitiveness. Labor potential reflects the totality of employees' physical,
intellectual, and professional abilities that can be used to achieve business goals. In small
business, the effective use of labor potential plays a particularly important role, as limited
resources require maximum returns from each employee.
Main part
1. Concept of labor potential
In our country, the development of labor relations in the field of entrepreneurship in recent years,
consistent measures to support and stimulate this process, as well as a number of adopted
program directions, necessitate the development of this area. In the context of economic
liberalization in our country, large-scale reforms are directly related to the development of labor
relations in the field of entrepreneurship, and their development has a significant impact on the
socio-economic development of society, including ensuring employment.
Labor potential is a set of quantitative and qualitative characteristics of the workforce, including
the level of education, professional skills, experience, health, and motivation of employees. It is
defined as the ability of personnel to perform a certain volume of work, taking into account time
and quality [1-3].
2. Factors influencing labor potential
The following factors influence the formation and use of labor potential [4,5]:
level of education and professional training;
work experience and qualifications;
working conditions and salary level;
motivation and social security;
Innovative environment and career advancement opportunities.
Volume 4, issue 8, 2025
45
Although the structural-evolutionary basis of labor relations in small business and private
entrepreneurship is manifested by agents, its two main theoretical aspects differ. Firstly, this
direction allows for a clear structure of the analyzed forms and types of labor. This is because the
entire life cycle of an employee does not always proceed sequentially, because at each of the
above-mentioned stages, the employee is guided by their inner feelings. After hiring an
employee and concluding an employment contract, both the employer and the employee can
make certain changes to the employment contract or, after improving the employee's
qualifications, establish new working conditions, etc., and so on, secondly, this direction has
theoretical significance, its practical significance is less. Since in small-scale production it is
difficult and complex to divide the hired labor into specific periods, the internal and external
conditions for the development of small and private entrepreneurship do not allow this.
3. Use of labor potential in small business
In small business, each employee performs a wide range of functions, which requires versatility
of skills and a high degree of responsibility. The effective use of labor potential here is linked to
the flexibility of labor organization, the optimization of work processes, and the creation of a
favorable psychological climate.
The innovative structure, as shown in the figure, determines the modern features of relations in
the field of innovative activity, such as the business environment, initiative, and reproduction of
labor relations (productive forces (labor)). In small business, every employee should be provided
with a normal workload. For this, it is necessary to take into account many factors. In particular,
working conditions are based on normalizing workload or creating and protecting working
conditions: physical, psychological, and environmental. The structural composition of labor
relations in small business and private entrepreneurship is grouped according to labor, socio-
economic, and innovative structures, where labor relations represent the effective organization of
economic activity and the improvement of innovative entrepreneurial relations that bring greater
returns than traditional entrepreneurship. The improvement of these relations also places special
demands on entrepreneurs, demanding constant creativity and research, the acquisition of new
knowledge, its practical application, the search for and effective use of new technologies.
4. Features of labor potential in small business in Uzbekistan
In Uzbekistan, small business is the main source of employment. According to the State
Statistics Committee, in 2024, the share of employees employed in the small business sector
amounted to about 75.6% of the total number employed in the economy. Labor productivity in
this sector is also gradually increasing due to the introduction of new technologies and vocational
training programs.
In the era of globalization, the process of assessing the use of human resources in the activities of
small business entities in each economic region and region is aimed at studying the following
issues: assessment of the effectiveness of human resource use. This category of issues includes
the analysis of the number of employees, their composition and qualification level, the study of
opportunities for improving their professional skills, verification of data on the effectiveness of
working time, the study of the dynamics, forms, and causes of labor activity, as well as the
analysis of the implementation of the established labor discipline, the study of the influence of
Volume 4, issue 8, 2025
46
the number of employees on production indicators, and the calculation and comparison of
profitability with labor costs. It can be said that the main task of studying the use of labor force is
to identify all factors that hinder the increase in labor productivity, leading to the loss of working
time and a decrease in wages. In this regard, assessing the effectiveness of human resource
utilization is carried out in the following important areas: providing the organization with the
necessary personnel, determining the dynamics and directions of workforce movement, and
improving labor productivity indicators.
Using statistical, operational, and other reporting documents containing various information
about the company's employees as information sources for analyzing the development of small
businesses serves as a primary factor in correctly assessing the effectiveness of human resource
utilization and developing methodological foundations. The assessment of the organization's
personnel is carried out according to quantitative indicators, for which the payroll fund, average
wages, and the number of employees are calculated. Along with quantitative indicators,
qualitative indicators characterizing professional qualifications, education, and the sex and age
composition of employees are also studied. At the same time, studying the personnel
composition also allows for the analysis of the effectiveness of using this type of resource.
Personnel analysis is carried out for each individual unit and according to a separate criterion
(for example, work experience or qualification level). The indicators selected as a result of the
analysis are also compared with the level of labor productivity in a specific unit. In improving
the efficiency of human resource utilization in small business activities, labor productivity is
primarily studied through the level of performance of labor productivity tasks, the development
of reserves for improving labor productivity indicators and measures for their utilization, as well
as factors influencing labor productivity change.
Conclusion
Effective use of labor potential in small businesses requires a comprehensive approach, including
improving employee qualifications, enhancing working conditions, and creating motivational
mechanisms. For Uzbekistan, the development of the vocational education system and state
employment support programs remains an important direction.
In the current conditions of economic modernization, special attention is being paid to small
business and private entrepreneurship enterprises in our republic, as this process requires new
innovations and initiatives, and only on their basis can economic development be ensured (by
saving resources and producing high-quality finished products). For this, small business and
private entrepreneurship enterprises should pay special attention to introducing the latest
achievements of science and technology into production. Significant work is being carried out to
further develop the small business and private entrepreneurship sector, which is playing an
increasingly important role in the national economy, and thereby filling the domestic market with
competitive, high-quality, and export-oriented products, creating new jobs, and on this basis
increasing the income of the population and ensuring sustainable economic growth. At the same
time, this sector is becoming the main driver for increasing tax revenues to the state budget and
increasing the share of gross domestic product, which is considered the main indicator of
economic development. Small business and private entrepreneurship are becoming the basis and
Volume 4, issue 8, 2025
47
main force of social, economic, and political stability in our society. The most important issue at
the stages of economic reforms in our country, laying the foundation for fundamental changes in
the structural composition of the economy, is the organization and development of
entrepreneurship and private business. To achieve this goal, a number of economic reforms have
been carried out, and large institutional foundations have been created to enhance its role. These
include regulatory legal acts that organize and guarantee entrepreneurial activity, non-
governmental organizations and enterprises that assist entrepreneurs. In short, the formation of
the complex of private entrepreneurship and small business in Uzbekistan is proceeding
successfully.
Appendix: Statistical analysis
The following figure shows the dynamics of the share of employees employed in the small
business sector in Uzbekistan for the period 2020-2024. The data shows a positive trend.
Fig 1
. Labor productivity in small business in Uzbekistan (conditional data)
Year Productivity (thousand sum/people) Note
2020 32500 According to research data
2021 34200 According to research
2022 35900 According to research
2023 37500 According to research
2024 38800 Forecast
Literatures:
1. State Committee of the Republic of Uzbekistan on Statistics. Reports for 2023-2024.
2. Law of the Republic of Uzbekistan "On Employment of the Population."
3. Becker, G. Human Capital: A Theoretical and Empirical Analysis. University of Chicago
Press, 1993.
4. Drucker, P. Innovation and Entrepreneurship. HarperBusiness, 2006.
5. Hisrich, R., Peters, M., Shepherd, D. Entrepreneurship. McGraw-Hill, 2017.
