The Division of Labour (Edexcel IGCSE Economics)
Spec point —
1.2.2d
The Division of Labour
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Based on observations made during a visit to a pin factory, famous economist Adam Smith developed the ideas of specialisation and the division of labour
- He noted that a single worker could not make more than 20 pins a day as it involved around 18 different processes, such as cutting the wire, sharpening the end, stamping the head, etc.
- However, if the labour was divided up into different tasks and workers specialised in just that one task, Adam Smith estimated that just 10 workers could produce 48,000 pins per day
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The division of labour occurs when a task is broken up into several component tasks
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This allows workers to specialise by focusing on one (or a few) of the components that make up the production process and thereby gain significant skill in doing it
- This results in higher output per worker, and so increases productivity
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Specialisation occurs on several different levels
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On an individual level
- E.g. A surgeon specialises in medical operating skills
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On a business level
- E.g. One firm may only specialise in manufacturing drill bits for concrete work
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On a regional level
- E.g. Silicon Valley has specialised in the tech industry
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On a global level as countries seek to trade
- E.g. Bangladesh specialises in textiles and exports them globally
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Worked Example Which one of the following is defined as ‘a task is broken up into several component tasks’? (1)
A. Division of labour
B. Creativity
C. Labour Intensive
D. Market equilibrium
The correct answer is: A. Division of labour (1)
B is not correct because this refers to new ideas C is not correct because this refers to high level of worker effort compared to other factors of production D refers to allocation of resources in most optimal way
Advantages and Disadvantages for Workers and Businesses
Spec point —
1.2.2d
Advantages and Disadvantages for Workers and Firms
Pros and Cons of the Division of Labour
| Stakeholder | Pros | Cons |
|---|---|---|
| Worker | - Workers can acquire the single skill required relatively quickly - Workers gain recognition and status for performing their skill well | - The work can be repetitive and boring - There is limited opportunity to gain additional skills - If the firm replaces labour with capital, the worker may find it difficult to find employment elsewhere due to their limited skill base |
| Firm | - Time spent training new workers is relatively short - Increased output allows firms to generate more sales and profit - Higher labour productivity lowers cost per unit for firms, which makes their goods more price competitive - Lower prices may mean greater international competitiveness for global firms | - Worker productivity can fall due to the boredom/ decreased motivation - Staff turnover may be high as workers seek new, interesting opportunities elsewhere - Firms may be unable to compete with cheap imports produced by cheaper labour abroad and will go out of business - Entire industries may close leading to structural unemployment |
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