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Time Rate V/S Piece Rate Systems
Let’s learn the difference between Time Rate V/S Piece Rate Systems.
Meaning:
- Wages are paid as per the time spent by workers.
- Wages are paid as per the output or production given by workers.
Old/New System:
- Oldest and simplest method of wage payment
- Modern and incentive system of wage system
Guarantee of wages:
- Gives guarantee of certain minimum wage payment to every worker
- Fails to give guarantee of minimum wage payment to every worker
Support:
- Employees and trade unions support time rate system.
- Employers and efficient workers prefer piece rate system.
Understanding of system:
- Easy to understand and simple to administer
- Complicated system as various recorded and registers are required to be maintained
- Distinction between workers:
- Distinction is not made between efficient and inefficient workers as all are paid at one and same rate.
- Distinction is made between efficient and inefficient workers. Efficient worker is paid more while an inefficient worker is paid less.
Effect on Production:
- Encourages workers to follow go-slow policy and naturally production suffers.
- Encourages workers to take more interest in the work and naturally production increases
Quality of production:
- Quality, workmanship of production are not affected, raw materials, machinery are utilized properly. The spoiled work is also negligible.
- Quality, workmanship of production may suffer. Increase in spoiled work and wastage of raw materials.
Supervision:
- Strict supervision is necessary as workers are paid as per the period spent.
- Strict supervision is not necessary as workers are paid in proportion to the production given
Suitability:
- Suitable to manufacturing units, also suitable when individual contribution is not easily measurable.
- Suitable when contribution of individual worker is measurable and work is standardized and resistive in character.
