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Unit 3 - Session 2

The document discusses various labour remuneration systems, focusing on the time wage and piece wage payment systems. The time wage system offers stability but can lead to inefficiency, while the piece wage system incentivizes productivity but may compromise quality. Group piece work combines collective effort with shared earnings, presenting both advantages and disadvantages related to quality and worker health.

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2 views3 pages

Unit 3 - Session 2

The document discusses various labour remuneration systems, focusing on the time wage and piece wage payment systems. The time wage system offers stability but can lead to inefficiency, while the piece wage system incentivizes productivity but may compromise quality. Group piece work combines collective effort with shared earnings, presenting both advantages and disadvantages related to quality and worker health.

Uploaded by

nathanjose627
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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UNIT 3

SESSION 2

Labour Remuneration

Introduction

Remuneration refers to the compensation given to employees for their efforts towards the
completion of a job. Various methods of wage payment are prevalent as per the requirement of
the industry. In some industries, the time rate system is suitable, while in others, the piece rate
system is more suitable.

Time Wage Payment System

Under the time wage payment system, worker remuneration is based on the hours spent on the
job. A major drawback of this system is that workers focus more on completing their time rather
than maximizing output, which necessitates close supervision.

Advantages of Time Wage Payment System

 Workers are self-motivated to stay at work, eliminating the need for enforcement.
 This system is easy for both workers and employers to understand and implement.
 Workers receive fixed monthly, daily, or hourly wages, ensuring stability.
 This method is relatively cost-effective compared to others.

Disadvantages of Time Wage Payment System

 It is difficult to distinguish between efficient and inefficient workers.


 Workers prioritize completing their hours over actual productivity.
 Employees are paid for their time even if no work is assigned.
 Efficient workers feel dissatisfied as their efforts are not rewarded proportionally.
 Over time, employees may become complacent and inefficient.

Piece Wage Payment System

Under this system, compensation is based on the number of units produced rather than the time
spent at work. Workers are generally given production targets, and their wages depend on
whether they meet, exceed, or fall short of these targets.
Wage Calculation Formula

Wages = Number of units produced × Per piece wage rate

Suitability of Piece Wage System

 Suitable for industries where close supervision is difficult.


 Ideal for labour-intensive industries producing uniform-quality products.
 Best suited for workplaces emphasizing quantity over quality.

Advantages of Piece Rate Wage System

 Workers are self-motivated to complete their targets.


 Provides a flexible work environment, as employers focus on output rather than work hours.
 Enhances efficiency and productivity.

Disadvantages of Piece Rate Wage System

 Quality may be compromised as workers rush to complete targets.


 Daily record-keeping of individual worker production is difficult.
 Maintaining workplace discipline regarding entry and exit times is challenging.
 Workers may damage machines or waste raw materials in their rush to produce more.

Group Piece Work

Group or collective piece work remuneration is based on the combined efforts of a group
performing a particular job or operation. Workers collectively share the earnings based on an
agreed distribution method, usually their basic time earnings.

Group Piece Work Calculation Formula

Group Price Work = (Hours spent on operation × Hourly basic rate or wages)

Advantages

1. Recognizes merit and efficiency, making it fairer than the time wage system.
2. Encourages workers to work harder, leading to increased production.
3. Reduces fixed overhead expenses per unit, lowering total production costs.
4. Accurately determines total labour costs per unit.

Disadvantages

1. Since pay depends on quantity rather than time, workers may neglect product quality.
2. Workers may use tools and machines carelessly, causing wear and tear.
3. Excessive work in pursuit of higher earnings can negatively impact workers' health.
Conclusion

Choosing the right wage payment system is crucial for balancing productivity and worker
satisfaction. While the time wage system ensures stability and fairness, the piece wage system
incentivizes higher productivity. Group piece work fosters teamwork but may lead to issues
related to quality control and worker well-being. Organisations must select the appropriate
method based on their operational needs and objectives.

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