This classification of direct labor as fixed or variable depends on the type of industry.  If you cannot reduce the number of direct labor employees or the number of hours that they work in a short time period (for example, six months), it should probably be classified as a fixed cost. With the increase in automation, many manufacturing processes require a fixed number of employees regardless of the production volume. In these situations, the direct labor employees would be considered fixed. For more information, see our training module Fixed, Variable, and Semivariable Costs.