A common way for bacteria to cooperate is via the secretion of beneficial public goods (proteases, siderophores, biosurfactants) that can be shared among individuals in a group. Bacteria often simultaneously deploy multiple public goods with complementary functions. This raises the question whether natural selection could favour division of labour where subpopulations or species specialise in the production of a single public good, whilst sharing the complementary goods at the group level. Here we use an experimental system, where we mix engineered specialists of the bacterium Pseudomonas aeruginosa that can each only produce one of the two siderophores, pyochelin or pyoverdine, and explore the conditions under which specialization can lead to division of labour. When growing pyochelin and pyoverdine specialists at different mixing ratios under different levels of iron limitation, we found that specialists could only successfully complement each other in environments with moderate iron limitation and grow as good as the generalist wildtype but not better. Under more stringent iron limitation, the dynamics in specialist communities was characterized by mutual cheating and with higher proportions of pyochelin producers greatly compromising group productivity. Nonetheless, specialist communities remained stable through negative frequency-dependent selection. Our work shows that specialization in a bacterial community can be spurred by cheating and does not necessarily result in beneficial division of labour. We propose that natural selection might favour fine-tuned regulatory mechanisms in generalists over division of labour because the former enables generalists to remain flexible and adequately adjust public good investments in fluctuating environments.