Specialisation and the division of labour

Overview

Specialisation and the division of labour, how the division of labour lowers a firm's average costs and three disadvantages of the division of labour for workers.

What you need to know

Answer each one before you reveal it.

Questions from this subtopic

Each one with the model answer underneath.

1. 1

   Define specialisation and the division of labour, and explain how they are related.

   Model answer

   Specialisation is the concentration of a worker, firm, region or country on a narrow range of tasks or products. The division of labour is a particular form of specialisation in which the production of a single good is broken into separate tasks, each performed by a different worker. The division of labour is therefore specialisation applied within the production process, while specialisation as a whole also covers firms, regions and nations.

2. 2

   Explain three reasons why the division of labour raises output per worker.

   Model answer

   Repeating one task develops dexterity and skill, so each operation is performed faster and with fewer errors. Time otherwise lost switching between tasks and tools is saved. Breaking production into simple repeated operations makes it worthwhile to design specialist machinery for each step, which raises output further. Training is also cheaper because each worker needs to master only one operation rather than the whole craft.

3. 3

   A workshop of four workers each making complete chairs produces 40 chairs a week. When the work is divided into four tasks, output rises to 64 chairs a week. Calculate the change in output per worker and express it as a percentage.

   Model answer

   Before the change, output per worker is 40 ÷ 4 = 10 chairs a week. After the change it is 64 ÷ 4 = 16 chairs a week. The rise is 16 − 10 = 6 chairs per worker, which as a percentage is 6 ÷ 10 × 100 = 60 per cent. Productivity has risen by 60 per cent with no increase in the number of workers.

4. 4

   If dividing tasks raises weekly output from 40 to 64 units while the total wage bill stays at £1,600, calculate labour cost per unit before and after.

   Model answer

   Before the change, labour cost per unit is £1,600 ÷ 40 = £40. After the change it is £1,600 ÷ 64 = £25. Labour cost per unit therefore falls by £15, a reduction of 37.5 per cent. This is why higher productivity from the division of labour allows firms to lower prices or raise margins.

5. 5

   Explain how the division of labour lowers a firm's average costs.

   Model answer

   Higher output per worker means the same wage bill is spread over more units, so labour cost per unit falls. Fixed costs such as rent and machinery are also spread over a larger output. Specialist equipment can be used continuously rather than being set up repeatedly for different tasks. The combined effect is a fall in average total cost, which allows the firm to compete on price or to earn a larger margin.

6. 6

   Give three disadvantages of the division of labour for workers.

   Model answer

   Repeating a single simple task is monotonous, so job satisfaction and motivation fall, which can reduce quality and raise error rates. Workers acquire a very narrow skill, making them vulnerable if that particular task is automated or the industry declines. Absenteeism and labour turnover tend to rise, which imposes recruitment and training costs on the firm and can offset part of the productivity gain.

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