Division of Labour

The division of labour occurs where production is broken down into many separate tasks.

Division of labour can raise output per person as people become proficient through constant repetition of a task.

This is also called learning by doing.

This gain in labour productivity then helps to lower the supply cost per unit for a business.

Reduced supply costs in theory will lead to lower prices for consumers of goods and services causing gains in economic welfare e.g. through an increase in consumer surplus.

Adam Smith and the Division of Labour

Adam Smith famously wrote about the division of labour in his book, The Wealth of Nations, published in 1776. Smith considered the impact of using division of labour in a pin factory in Glasgow.

He claimed that by separating the production process of pins into 18 different parts, then just 10 workers would be able to produce 48 000 pins in one day, a significant increase on the number that could be produced if each worker made a pin in its entirety from start to finish.

Smith realised that the increase in productivity stemmed from workers being able to focus on just one task, gaining large increases in dexterity, being able to use specialist tools to get the job done, and wasting less time moving from task to task. He did note, however, that this could cause significant boredom and the risk of worker alienation.

Disadvantages from specialisation and the division of labour

1. Unrewarding, repetitive work that requires little skill can lower motivation and eventually causes lower productivity.
2. Workers may take less pride in work and quality suffers.
3. Dissatisfied workers causes absenteeism to increase.
4. People move to less boring jobs creating a problem of high worker turnover and increased hiring/training costs.
5. Increased risk of repetitive strain injuries at work.
6. Some workers receive little training and may not be able to find alternative jobs when out of work – they suffer structural unemployment / occupational immobility.
7. Mass-produced standardised goods may lack variety.