What is Piece Wage System?
“Wages can be defined as a sum of money paid to the staff by the employer for rendering services as per a contract. Piece rate is used for jobs in which the quantity of work done by a person or a group is readily counted or calculated. ”
Wages can be defined as a sum of money paid to the staff by the employer for rendering services as per a contract. Piece rate represents a uniform payment for each unit processed.Sometimes, the piece rate is modified to provide a guaranteed hourly or weekly minimum. Piece rate is used for jobs in which the quantity of work done by a person or a group is readily counted or calculated.
They require uniform-working conditions, raw materials and consistent supporting services. The amount of work done and not the time spent is the determining factor in this type of wage system.
In this way not only is the production increased but the steadiness of production is also ensures fully. It stimulates employees to produce more as their wages are related with their productivity. This system is fair to both employers and employees as it apparently restores to the ambitious workmen. This method provides them with the opportunity to secure the increased compensation due to them on account of their greater skill and diligence.
The fact that the cost per unit is constant, the computation of the labor cost becomes a very easy task. It helps in preparing estimates or tenders. With the increase in production, certain overheads remain fixed and this reduces per unit cost.
This gives advantage to the consumers also as now they get products at affordable rates. Under this method, meritorious workers are rewarded and poor workers are panelized. Workers try to improve methods of work so that their output is optimum.
In this way a lot of wastage of time is avoided and the work methods can be standardized very easily. The workers use the machines in such a way that there is no breakdown in machines and the raw materials are also properly handled.
Under this system, strict supervision of workers is also not required. Workers are themselves interested in production. It encourages them and there is absolutely no wrong done. It also results in better industrial relations. The workers also refrain from wasting time or doing the work slowly.
Author - DeeKay
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