Business, Legal & Accounting Glossary
Division of labour is the term first used in Adam Smith’s The Wealth of Nations to describe the separation of the manufacturing process into distinct and simple operations which are then delegated to specific hands or machines to perform. Smith thought that the quality and quantity of work carried out by a workforce organized along the division of labour principle was so superior compared to work done by non-divided labour that he said:
The greatest improvement in the productive powers of labour, and the greater part of the skill, dexterity, and judgment with which it is anywhere directed, seem to have been the effects of the division of labour.
Adam Smith attributed the increased productivity of labour after division to 3 reasons:
It is also generally considered that because the cost of training workers to perform a simple task is far less than training workers to make the whole good division of labour can lower the average cost of production.
It is generally believed that human society began to greatly develop after the division of production of goods began to occur between different people. As people specialized in the production of certain goods, like growing grain or concentrating on the production of weapons, they began to produce volumes that were over and above their own personal needs, a surplus. These surpluses were then traded or bartered for other people’s surpluses. This process allowed people to gain a far bigger range and quality of goods than they would have been able to produce themselves. Human propensity to trade is generally thought to have encouraged division of labour further. So from general professions, like smiths, more specific branches were developed, like nail making for example.
Division of labour in the wider society is generally assumed to be naturally controlled by the extent of the market. If the market is very large, where large volumes of product or service are demanded, a firm or a worker will generally find it easier to specialise, achieving greater efficiency and thus larger profits. However small markets generally do not permit a high degree of specialisation of the labour force. Thus one may expect a person who lives in isolation to carry out more jobs in order to provide a comfortable lifestyle compared to a person who lives in a large city.
This may explain why highly and densely populated areas near the coast or a river, which effectively expands the market further by providing transport links to other populated areas, have developed quicker in their overall level of technical progress.
Although a division of labour can lead to considerable gains in productivity and quality of production, division of labour can also have negative effects on the production for the following reasons:
Production lines in thousands of factories across the world are based on the principles of division of labour into very specific and easy to learn tasks. However, some have challenged whether this form of production really does guarantee the most efficient use of labour and capital and does produce the best quality. Some have suggested that more humanistic, team-based production methods, such as parallel production used at Volvo’s Uddevalla car plant, will be more efficient in the long term.
Volvo’s Uddevalla car plant used a method of production called parallel assembly where all of the required assemblies for a car was carried out by a single, independent team of highly skilled workers. Uddevalla plant also partly depended on a better physical layout of the factory to deliver more efficiency.
The basic principles of parallel production are as follows:
Uddevalla car plant has been compared to other car plants in Sweden which use normal production line assembly method. One such plant was Volvo’s Gothenburg car plant. Uddevalla was said to have outperformed Gothenburg in several key areas:
Some economists have argued that the Uddevalla car plant was outperforming Gothenburg because Gothenburg was, at the time, not as productive as it could have been. Volvo shut down the Uddevalla plant after 3 years of operations because Uddevalla was only a place of assembly, so the cost of transporting all of the car parts to this plant was greater than any costs saved as a result of greater efficiency at the plant. Sweden was also suffering an economic slowdown at the time and the domestic demand for cars was shrinking.
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This glossary post was last updated: 4th August, 2021 | 0 Views.