Unit 1 Micro: Division of Labour

The division of labour occurs where production is broken down into many separate tasks. Division of labour raises output per person as people become proficient through constant repetition of a task – “learning by doing”. This gain in productivity helps to lower cost per unit and ought to lead to lower prices for consumers. But there are obvious limits to the division of labour.

1. Unrewarding, repetitive work that requires little skill lowers motivation and hits productivity. Workers begin to take less pride in their work and quality suffers, the result may be a problem of diseconomies of scale. We often see dissatisfied workers becoming less punctual at work and the rate of absenteeism increases.

2. Many people may choose to move to less boring jobs creating a problem of high worker turnover for businesses. According to figures for 2010, the overall employee turnover rate for the UK was 13.5% per year. In other words, nearly one worker in seven changes jobs each year. The highest levels of labour turnover are found in retailing, hotels, catering and leisure, call centres and among other lower paid private sector services groups

3. Some workers receive little training and may not be able to find alternative jobs if they find themselves out of work (they may then suffer structural unemployment).

4. Another disadvantage is that mass-produced standardized goods tend to lack variety for consumers