System/Method/Types of Wage Payment Before considering the various methods of wage payment it should be str ressed that every organization should have a sound job structure that has been properly evaluated, preferably wi ine canopaton of ctsvont nade unions. This siructure should take account of differentials between grades and any variations in actual payment methods between one section of the workforce and another. Within this overall structure, which may be extremely complex in a large organization. the following methods of payment may be used Time Wage This is the oldest and the most common ‘method of fixing wages. Under this system, workers are paid accordingly to the work done during a certain. period of time, at the rate of so much per hour, per day. per week, per fortnight or per month or any other fixed period of time. The essential point is that the production of the worker is not taken into consideration in fixing the wages; he is paid at the settled rate as soon as the time contracted for is spent. Advantage of Time Wage System . ’) Simplicity is the greatest merits of time wage system. Time which a man expands on a job is easy to measure. The quality of the work is not degraded as the workers are in no hurry to increase the output. As all the workmen employed for doing a particular kind of work receive the same wages, ill-will and jealousy among them are avoided. Due to the slow and steady pace of the worker, there is no rough handling of machinery, which is a distinct advantage for the employer. It is the only system that can be used profitably where the output of an individual workman or groups of employees cannot be readily measured. Trade unions accepts this form of wage payment quite willingly because it does not create any distinctions on the rank of workers of account of differences inefficiency. i) i) i) » vi) Scanned with CamScannerDisadvantages of Time Wage System | aa i) Ih does not take into account the fact that men are of diferent sbities and that if all the pe P equally, better workmen will have no incentive to work harder oS ee il) As there is no specific demand on the worker that a piece of work needs fo income gi time, there is always the possibility of systematic evasion of work Dy WOFKMEN. | 1 total expenditure iS the employer does not know the amount of work that wil be ab i byiench se con wages for turning out a certain piece of work cannot be adeq} rove iv) AS no record of an individual worker's output is maintained, it becomes dificult for the employer to determine his relative efficiency for purpose of promotion. v) Itdestroys the morale of workers and efficient workers are either driver to the level of inefficient workers. . .n out or their efficiency is pulled down Suitability of Time Wage System i) Where supervision is close as in small concerns. ii) Where quality is more important than quantity e.g. tool making. ill) Where measurement of work is nat simple or not po! iv) Where specialized skills are required to perform the job. vv): Where work is not repetitive and standardized, vi) Where collective efforts of a group of worker are required for the performance of work. 4 vil) Where work is machine paced and an individual worker has no control over the number of units produce Piece Wage System a . Under this system, workers are paid according to the amount of work done or the number of units completed, the rate of each unit being settled in advance, irrespective of the time taken to do the task. Under this system, wage payable to an employee are related directly to the quantity of work done by him. The work may be measured in terms of units of output. The units is called piece and the payment is made so much per piece. ‘Wage (W) = Number of pieces produced (N) x rate per piece (R) The piece wage system is sometimes calléd incentive system because the piece rate is directly related to the efforts put in by the worker. Advantages of Piece Wage System i) It pays the workman according to his efficiency as reflected in the amount of worth turned out by him. It satisfies an industrious and efficient worker, for he finds that his efficiency is adequately rewarded. This gives him a direct stimulus to increase his production. ii) As the direct labor cost per unit of production remains fixed and constant, calculation of costs while filing tenders and estimates becomes easier. ili) The total unit cost of production comes down with a larger output because the fixed overhead burden can be distributed over a grater number of units. iv) Itrequires less supervision because the workers are themselves in hurry to do all. v)_ Itavoid frequent industrial disputes which otherwise are inevitable. Disadvantages of Piece Wage System i) Payment under this system is Irregular and’ uncertain for workers’ point of vi uncertainty in the life of workers as well as he feels unable to maintain a doctac gong ond. thus. creates desi ' of the uncertainty of the amount of wages. rable standard of life because ii) During the periods of illness, or disability, the worker is not paid any amou i , periods monetary need becomes more pressing. 'Y amount, whereas in fact, during these ‘Too much emphasis on the quantity of production may lower the quality of The establishment of piece rates is difficult and often becomes » Sou of a workers, Without undertaking time and motion study and having past experience: ee nes om tne Part of so low a level that it exercises a demoralizing effect on the workers * Placa rale may, be sat st v) There is a greater chance of deterioration in the quality of work owin to increase production. This over — zealousness may tell upon their 1g to over-zealo us ann tezeelousness onthe part of workers 19 in a loss of efficiency, Suitability of Piece Wage System i) Where specialized artistic skills or craftsmanship is not required for work is not art based or craft man oriented. quired for the performance of the job, ie, where ii) - Where quantity of output is more important than its quality, Scanned with CamScannerBasis of Difference Difference between Time and Piece Wage Payment Methods Time Wage Payment Method Piece Wage Payment Method 1) Basis of Wage | Wage is computed on the basis of time. Units of production are the basis of wage Computation ‘computation, : 2)_ Efficiency ‘Wages are not related wih efficiency, ‘Wages are related with efficiency. 3) Quantity of Production is at slow speed. Hence, quantity of | Speedy production. Hence, quantity of Production production is small production is large. 4) Quality of ‘Quality production. Quality of production doubtful, Production 8) Guarantee of ‘Minimum wages are guaranteed to workers. | Minimum wages nol guaranteed Minimum Wages ©) Supervision nis necessary fo control quantity of | Supervision is necessary to control quailty of production. 7 No danger of accident because of slow speed of | Threat of danger of accident due lo high work. Life of the worker remains safe. speed of work. Life of worker in danger. ® Liking of Trade _| Liked by Trade Unions. ‘Opposed by Trade Unions. Unions 9) Maintenance Due to proper use of machine tools, material, | No proper use of means of production due to Cost ‘tc. maintenance costis low. hurried production. Hence, maintenance cost is high 70) Advance Fixation | Cost of production cannot be anticipated, as the | Cost of production can be anticipated as of Cost ‘number of units produced in a given time cannot, be ascertained, wages are already fixed per unit of production. ‘Time is an important factor. + Units of goods produced are important factor. 11) Important Factor 12) Wastage of Resources ‘Less chances of wastage. More chances of wastage. Scanned with CamScanner