1.2.2 Productivity and division of labour

Productivity  

Output per unit of input (in a given time period)

Output per worker (labour productivity)

Example

  • Firm 1 uses 10 machines and makes 100 products. 

  • Firm 2 uses 5 machines and makes 100 products. 

Here, the production is the same, but firm 2 has the highest productivity. 

Calculating productivity

Total output
Number of inputs

Firm 1: Total output = 100, input = 10. 

Productivity = 100/10 = 10 units per machine

Firm 2. Total output = 100, input = 5

Productivity = 100/5 = 20 units per machine

Factors affecting productivity

Productivity can be improved if businesses make better use of their resources. 

Land – Land can be made more fertile. E.g. given fertilisers or pesticides, proper drainage can be implemented to prevent flood damage, irrigation systems (redirection of water from rivers to be used in dry areas to help crops grow), reclamation (the creation of new land from the ocean/river/lakes, GM crops. 

Labour – Training and education, increase motivation, improved working conditions, change of working practices (e.g. factory layout), migration (attract more skilled workers from overseas)

Capital – improved technology. This can result in increased productivity in all 3 sectors.  

Division of labour

  • Division of labour is the breaking down of the production process into smaller parts. 

  • It allows people to concentrate on the task/skill at which they are best. 

Advantages of division of labour

  • Increased productivity: Specialisation allows workers to become more skilled in specific tasks, leading to higher efficiency.

  • Less time wasted changing between tasks.

  • Economies of Scale: Larger quantities of identical goods can be produced more efficiently.

  • Lower Costs: Reduced training time and waste contribute to cost savings.

Disadvantages of division of labour

  • Monotony: Workers may find repetitive tasks monotonous, leading to job dissatisfaction. (Solution = job rotation (changing roles))

  • Productivity may not be improved if workers are not motivated.

  • Workers may need to be trained – this is cost to firms