Specialisation in Economics

Specialisation is where tasks within an operation are divided up into smaller component parts and the workforce learns the component parts of the smaller tasks rather than the overall process.

Specialisation and its implications for economics was explained by the Economist Adam Smith who used the example of the manufacture of pins. 1 worker may produce a few pins in a day. However, dividing the manufacture tasks of a pin into 18 or so component parts and allowing workers to specialist in each part of the process meant that they could produce substantially more pins. This occurred for various reasons, one is that focusing on a specific task meant a worker could work faster, plus they did not need to switch from tasks to task.

Smith explained that specialisation therefore led to productivity gains, productivity means either higher prices and increased margin, or lower prices and more sales volume, both mean more profit.

For Lauren she specialises in making cupcakes rather than birthday or wedding cakes. This is one example of specialisation. Another example might be where the manufacture of a cake is broken up into its parts, getting the ingredients, mixing them, baking them, decorating the cake. Lauren could specialise in decoration. This is also an example of specialising in a component part of a bigger process in order to achieve more.

There are a number of costs and benefits for Lauren from specialising. A benefit to Lauren is her enjoyment levels. If she loves making cup cakes she is lucky because that is what she specialises in. She may have grown to love the job because she specialised in it and became better so she has job satisfaction from having a higher skill over someone who is not a specialist. This is a benefit for Lauren. Sometimes specialists get paid more because of their skill, this is also a benefit to Lauren. However, there are some costs, one might be that she risks becoming obsolete if her skills are no longer needed. If customers no longer want to buy cupcakes, Lauren may find her job at risk of redundancy. Also, Lauren may wish she was able to do wedding cakes as much as cupcakes, she may feel bored making cupcakes and want variety in her job in making other cakes. This is a cost of specialisation.

Overall the benefits of specialisation outweigh the costs and this is seen throughout society. The hotel receptionist learns that job and does it well focusing on good customer service, they leave the cleaning of the room to the cleaner who specialises in that and does it quickly as a result. Teachers focus on specific subjects or age groups of students, doctors specialise in specific areas of medicine. Specialisation within the economy is seen everywhere and despite it having downsides, the productivity gains to society as a whole have been enormous.