4). Specialisation and Division of Labour

• What is Specialisation?

  It is the production of a limited range of goods by a company, individual or country. This means that trade is essential as it is the only way they can access all that they need.
• Limitations of Specialisation:

  • Countries may become overdependent on one export and if this fails, their economy collapses.
  • Doing the same task repeatedly everyday can cause workers to become bored and thus, unmotivated.
  • If there is a decline of a certain industry, workers may not
  • have transferable skills. This can cause unemployment.
• What is Division of Labour?

  Specialisation by workers, who perform different tasks at different stages of production to make a good or service, in co-operation with other workers. Essentially, it is when the production process is split up into smaller tasks and assigned to different workers.
• Benefits of Division of Labour:

  • The division of labour enables labour productivity to be increased.
  • This may also lead to a higher quality of goods and services, since workers are more skilled at their jobs.
  • It is more cost effective to develop specialist tools, improving speed or quality.
  • Time is not wasted moving between jobs and getting out tools etc.
  • Workers only need to be trained to do one specific task, rather than many, saving time and money.
• Limitations of Division of Labour:

  • If someone is only doing one specific task, it can make work very boring which will lead to poor quality of work and people leaving the business.
  • There is a reduction of craftsmanship and a much more standardised product because of mechanisation.
  • If for some reason production in one process is delayed, every other task must stop until that problem is solved.
  • The workforce do not have wide industrial training and could therefore suffer from structural unemployment.
• What are the functions of money?

  • Store value
  • Deferred payment
  • Medium of exchange
  • Measure of value
• Benefits of Specialisation:

  • Increased productivity because workers become quicker at their job
  • Specialised workers tend to receive higher pay
  • Greater economic efficiency