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  Piece Wage System

Introduction to Piece Wage System

The payment with in this system is made in proportion to the work completed, no regard being provided to time taken in completing the work. The rate is predetermined per unit of output, per article, per commodity etc. The worker is paid for the overall units produced or manufactured. So the system is result or output oriented. For instance, if the rate per unit is Rs. 10 and the worker done 10 units in a week then his week's wages should be 10 × 10 Rs. 100 It may be described in the form of the following formula:

Total earning = Rate per unit = Units completed

This type of system takes into account the quantity of work done. Though, to make sure quality units not done up to the mark might be rejected. Payment is made for those units only that are accepted. The rate per unit must be set bearing in mind the issues like physical labour needed, the normal time which a worker would take in finishing one unit etc. Piece-wages system might be for individual workers or for a group of workers.

(a) Individual place work

Individual piecework system is while the wages are paid to each worker as per to the rate per unit of production of rate for each job or operation completed the piecework system.

(b) Group piece work

Group or collective piecework system is that in which the workers are paid compensation on a group basis since they perform a specific job or operation after making group effort the workmen of a specific group can, later, divide the earnings in any proportion. The base of distribution is usually their basic time earnings. This spent on the operation hourly basic rate of wages).

Advantages

1. The system predictable the merit and efficiency of workers and, so, can be considered as more equitable than the time-wage system.

2. The workers are persuades to work hard with the result that production is improved. This decreases the fixed overhead expenses per unit and, at last the total cost of production.

3. The total labour cost per unit or job is precisely ascertained if this system is used.

4. The workers too are get profit because they get more wages. They can complete the work in less time and in the time saved they can make extra earnings.

Disadvantages

1. Because the workers are paid for the quantity of units created irrespective of the time they have used up, they take no precaution to enhance the quality of products. Occasionally, in a rush to complete the job earlier, they decline the quality of the goods.

2. Sometimes, the employees handle the tools and equipments extremely rough and carelessly to get a high output, causing thus losses to the firm or industry.

3. The workers suffer loss if because of particular reasons; they are unsuccessful to work efficiently for a specific period. No assurance is given for the days wages.

4. Quick and excessive work, in a bid to earn more, proves not good for health of  workers.

5. While the workers start doing the work more effectively and the wages start increasing and up, the employers have a trend to use workers.

6. Fixing the equitable piece rate is a task of significant difficulty.

The system needs a vigorous system of check of the quality of the production. A strict vigilance should be reserved to observe that the workers make a correct use of materials provided to them, handle the machines appropriately. The system is generally followed in coal mining, shoe factories, textile industries etc. In which the work is of a repetitive nature and alter in the conditions of job is not frequent the system is best suited.

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