Monday, January 20, 2014

Economics of Specialisation (AS-CIE)



Division of labour or specialisation is where a sophisticated/ complicated task is divided into many smaller parts each done by a small group of workers or individually

Where do we see the division of labour?
In fact it is too common and everywhere. In case if you don’t realise, look around you or even consider yourself as an example. In a car factory, we have people like the design engineers, assemblers, technicians who test-drive the cars, marketing personnels and many more. In a restaurant, there are chefs, cashier, waiters and waitresses. In the education industry, we have subject specialists, administrative staffs, manager of the A-Level department, counsellors and others. At individual level, we do specialise. If you represent your school for a badminton competition, then you are said to be specialising in that sport. If you can play a guitar of all the musical instruments out there, then perhaps you are a guitar specialist

Why is division of labour important?
For many obvious reasons:
1. When a worker is performing the same task repetitively, he or she becomes good at it. Over the time, it becomes so easy to the extent where effort and thinking are no longer required. It is just so automatic. This is the benefit to a factory worker. In some other professions such as property sales consultant, mortgage loan officers and insurance agents, being more skilled means greater income since they can easily seal more deals

2. Having more skilled workers is also good for a factory or firm. Since the workers are so efficient, it can actually refrain itself from hiring as many workers as before. In other words, wage costs will fall because a firm now hires fewer employees

3. Revenue and perhaps profit will increase. A skilled worker will reduce customer complaints, reduce their waiting time and improve their welfare. This will keep them coming back. An experienced hair stylist will be able to serve more customers in two hours than a less skilled one. Equally, an experienced chef is very important because lunch and dinner are the best time to increase sales due to high traffics. If customers are told to wait very long for their food to be served, the restaurant stands to lose the additional total revenue that could have been generated. On top of that, dissatisfied customers will unlikely return which may affect its business position in the long term

4. Without specialisation, a factory will have to buy equipments for all the workers so that they can perform their job. However, this is not without problems. First, it is not possible to equip each employee with machine to work with as this will be very ridiculously expensive. Second, there is an issue of limited space within an office or factory. After specialisation, the usage of machineries is more cost-feasible as only a small group people will be assigned to it. This will increase the overall level of productivity boosts by division of labour and usage of tools

5. Production process becomes possible with specialisation. As an example, consider the production of aircrafts and container ships. Without specialisation, a person will have to master the art of production from A to Z and considering that aircrafts are so complicated, he or she is going to use the entire lifetime just to learn how to manufacture it. By then, maybe 20 years have passed and nothing is produced. This also indicates that demand cannot be met. The same goes for lecturing. If I was told to teach Mathematics, Physics, Chemistry, Biology and Economics, maybe after 5 years I’m still learning it. A college will not be able to function that way. Upon division of labour, a person just has to master the discipline he is allocated to. Operation becomes possible

6. Jobs can be created from the division of labour. Instead of performing all the tasks on a solo basis, now there will be different people doing different thing within the factory or office. More jobs are created which can be beneficial to the national economy

Specialisation is not without problems:
1. If a task is too simple and repetitive, then workers may find it boring. It will not be long before the productivity falls. This is a problem because once workers begin to take less pride in their work, quality may suffer, absenteeism may increase and some will be less punctual to their workplace

2. The second disadvantage is related to the first. Once they reach the point where they find themselves learning nothing, they will most likely call it a quit. Highest labour turnover is found in retailing, hotels, catering and leisure, call centres and other lower paid private sector services jobs. The problem that has been created is, firms have to consistently waste money to advertise and time to train new ones

3. Specialisation creates over dependency. If one part of the production process is affected, perhaps the whole assembly line could grind to a halt. As an example, when there was a tsunami in Japan and flood in Thailand in the recent years, production of Honda and Toyota cars in other parts of the world was affected simply because the production plant is temporarily shut and so there were no spare parts manufactured

Does division of labour necessarily lead to boredom?
This question has both ‘yes’ and ‘no’ as an answer. Jobs that are routine, simple and that can be done by anyone can easily lead to boredom

However, being an Economics lecturer can be quite fun. I get to interact with different people every day and see different students almost every term. The subject itself is so broad that in fact I am still learning new things from the world as well as students despite having ‘mastered’ the subject. Each day, there will be new case studies and different scenarios which require unique approach to deal with and many more. In a nutshell, my profession is quite sophisticated and learning is dynamic rather than static. Personally, I find it thrilling than say, being a cashier

How does the division of labour create more efficiency?
1. Mastering one small part is way easier than the whole complicated process

2. Workers no longer need to move around. By staying put in one place, more works can be done.

3. Consider a chef who no longer needs to simultaneously assume the role of a waiter

4. People get to choose the discipline that they are passionate in rather than being told to perform tasks that they dislike. As long as they are interested, they will be more passionate and naturally become good at it

I will talk about international division of labour in another post

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