Learning Objectives:

Specialisation and the division Of labour Learning Objectives: • To recognise Adam Smith’s contribution to the division of labour. • To understand how the division of labour effects organising production. • The advantages and disadvantages of specialisation.

Re-Cap Questions What theories can be represented on a PPF? To go further…can you show these diagrammatically?

Re-Cap Questions Why is is reasonable to assume that PPF’s bow outwards?

Specialisation and the division of labour

A brief history… This is the mystery we’re trying to solve : The United States is a big country. It has over 300 million hungry people who need food every day. How do they get fed? The way we handled this problem back in the bad old days was, everyone would grow their own food. There weren’t many people back then, maybe not 300 million in the entire world. The way we handle this problem today is, nobody makes their own food. Nobody makes their own anything. And as a result, there’s a lot more of everything.

A brief history… In the bad old days, people were self-sufficient. Not literally, of course, but pretty near to it. People grew their own food, built their own houses, made their own clothes. And they were poor. Nowadays nobody makes their own anything, not even to sell. And people are generally…richer!

TASK: 10-15 mins MAKING A TOASTER: What components go into making a toaster? How would you put it together, where would you get the components from? I want you to think about all of this, and tell me how long it would take, and how much you think it would roughly cost. Put some thought into it and get your plan on your whiteboard!

TASK: If you went to a supermarket, or online, what is the cheapest you could pick up a toaster for? So which option makes more sense and why??

The economy works because everyone contributes a little part of the economy, and the whole thing churns out an amazing output that is the source of our historically sky-high standard of living. It’s called the division of labor, and the farther we progress along the division of labor, the richer we get.

Specialisation is when we concentrate on a product or task. Specialisation happens at all levels: • The specialization of tasks within extended families in many of the world’s poorest countries • Within businesses and organizations • In a country – Bangladesh is a major producer and exporter of textiles; Norway is a leading oil exporter. And Ghana is one of the biggest producers of cocoa in the world. • In a region of a country – for many years the West Midlands has been a centre for motor car assembly, there has been huge investment in recent years in the Mini plant at Oxford

The 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.

While watching this – note down FIVE interesting points. https://www.youtube.com/watch?v=r43dv8k8M1k

Car production involves a high degree of specialisation • Some workers will design the cars • Some will work on testing cars • Some will work on marketing • Some workers will work on different sections of the assembly line. Their job may be highly specific such as putting on tyres e.t.c.

Adam Smith Adam Smith – regarded as the father of Economics believed that, in simple terms, the division of labour, leads to specialisation which leads to greater productivity and thus economic growth.

Adam Smith ‘The Father of Economics’ The main focus of Adam Smith's ‘The Wealth of Nations’ lies in the concept of economic growth. Growth, according to Smith, is rooted in the increasing division of labor. This idea relates primarily to the specialization of the labor force, essentially the breaking down of large jobs into many tiny components. Under this regime each worker becomes an expert in one isolated area of production, thus increasing his efficiency. The fact that laborers do not have to switch tasks during the day further saves time and money. Of course, this is exactly what allowed Victorian factories to grow throughout the nineteenth century. Division of labor also implies assigning each worker to the job that suits him best.

Advantages of dividing labour 1. Increase in Production: With the adoption of division of labour, the total production increases. Adam Smith has explained the advantage of division of labour with the help of an example that a worker can produce only 20 pins daily. If the making of pins in a modern factory is divided into 18 processes, then 18 workers can produce 48,000 pins in a single day.

Advantages of dividing labour 2. Increase in Efficiency of Labour: With division of labour, a worker has to do the same work time and again, and he gets specialisation in it. In this way, the division of labour leads to a great increase in efficiency.

Advantages of dividing labour 3. Increase in Skill: Division of labour contributes to the development of skill, because with the repetition of the same work, he becomes specialised in it. This specialisation enables him to do the work in the best possible way, which improves his skill.

Advantages of dividing labour 4. Increase in Mobility of Labour: Division of labour facilitates greater mobility of labour. In it, the production is split up into different parts and a worker becomes trained in that very specific task in the production of the commodity which he performs time and again. He becomes professional, which leads to the occupational mobility. On the other hand, division of labour implies a large-scale production and labourers come to work from far and near. Thus, it increases geographical mobility of labour.

Advantages of dividing labour 5. Increase in Employment Opportunities: Division of labour leads to the diversity of occupations which further leads to the employment opportunities. On the other hand, the scale of production being large, the number of employment opportunities also increases.

Advantages of dividing labour 6. Goods of Superior Quality: Division of labour is beneficial in making goods of superior quality. When the worker is entrusted with the work for which he is best suited, he will produce superior quality goods.

Advantages of dividing labour 7. Reduction in the Cost of Production: If a shoe-maker makes himself two pairs of shoes daily, then four shoe-makers can make more than eighth pairs of shoes if they work in cooperation with each other. In this way, division of labour increases production which reduces the average cost of production. Saving of capital, tools and machinery, etc. also help in the reduction of cost of production.

Disadvantages of dividing labour 1. Monotony: Under division of labour, a worker has to do the same job time and again for years together. Therefore, after some time, the worker feels bored or the work becomes irksome and monotonous. There remains no happiness or pleasure in the job for him. It has an adverse effect on the production.

Disadvantages of dividing labour 2. Lack of responsibility: Under division of labour, the final product is not the output of a single person but the creation of several workers. Therefore, no individual can be held responsible if anything goes wrong. Involvement of workers in their work is reduced.

Disadvantages of dividing labour 3. Staff turnover people may choose to move to less boring jobs creating a problem of high worker turnover for businesses. The employee turnover rate for the UK is around 12% per year, nearly one worker in seven changes jobs every twelve months. The highest labour turnover is found in retailing, hotels, catering and leisure, call centres and among other lower-paid private sector services groups

Disadvantages of dividing labour 4. Lack of job pride: As a worker performs only a part of the job, he cannot take pride in the final output. There is little pleasure of creating something. Specialised workers may lose jobs due to changes in the process of work. Traditional craftsmanship declines.

Disadvantages of dividing labour 5. Too much interdependence: Division of labour leads to interdependence between individuals, firms, industries and countries. Failure of any one link due to strike, war, breakdown in transport and communication, depression, etc. may cause great harm.

TASK: In 5 minutes, how many real life examples can you think of that use division of labour?

KAA – 6marks Evaluation – 4 marks The 4 assessment objectives are: Knowledge, application, analysis, evaluation

Jan 2011 Remember there are 4 assessment objectives • Knowledge • Application • Analysis • Evaluation • 6 marks are going for knowledge, application and analysis • There will be 4 marks for evaluation

Remember there are 4 assessment objectives • Knowledge • Application • Analysis • Evaluation • 6 marks are going for knowledge, application and analysis • There will be 4 marks for evaluation

Learning Objectives: