IndexSr. no content 1 What is wage payment system 2 Importance & characteristics 3 Method and its application 4 comparison 5 conclusion
What is wage payment system O It is the way of giving financial compensation to the workers for the time and effort invested by them in converting materials into finished products. O This method adopted by manufacturing industry to remunerate workers.
ImportanceO Facilitates the preparation of wage plan for future.O Determine the cost of production and the profitability.O Determines the earning their living standards.O Affects the interest and attitude of the workers and the rate of labor turnover.O Helps in recruiting skilled, experienced and trained workers.O Helps to increase the productivity and goodwill.
CharacteristicsO Fair and justifiable to both.O Help in maximizing workers satisfaction and minimizing labor turnover.O Assure minimum guaranteed wages to all workers.O Provide more wages to efficient and skilled workers.O Follow government policy and trade unions norms.O Simple and understandable to all the workers.O Help in improving performance and productivity of the workers.O Flexible enough to suit the needs of the organization.
Time Rate SystemO Laborers get wage on the basis of time which is utilized in organization. This wages may be charged on per hour, per day, per month or per year basis.O It is also called as day wages system or time wok system.
BenefitsO Workers can easily compute their own remuneration.O Earnings are regular and fixed and do not suffer from temporary loss of efficiency.O No pressure, the quality of work can be kept high.O Learners can concentrate on learning the best methods of work.
DisadvantageO No incentive for better performance as reward is not proportionate to effort.O Guaranteed remuneration makes workers indifferent and complacent.O Calculation of labor cost per unit is difficultO Control over labor cost becomes difficult and more payment may be made for the lesser amount of work.
SuitabilityO Units of output are non-measurable an (office work and mental work)O Quality of work is important, (artistic furniture, fine jewelry, etc.)O Workers are new and learning the jobO Collective efforts of a group of persons are essential for completing the job.
Piece Rate SystemO Laborers can get the wages on the basis of their work done. No time element will be used for calculation of wages.O Under this, method, laborer tries to best for producing the products fastly for getting more wages. This method is also called payment by result.
BenefitsO Direct relation between effort and rewardO Ambitious and efficient workers are provided ample opportunity to utilize their talent and increase their earningsO Management can distinguish between efficient and inefficient workers.O Increase in productivity results in higher output and lower costs of production per unit.O workers themselves have a stake in maximization of efficiency, cost of supervision is low.
DisadvantagesO Difficult to fix piece wage rates.O Earnings of workers are not stable and they may suffer temporary delays or difficulties.O This system may create jealousy between efficient and inefficient workers.O Clerical work is increased.O The method is not practicable when contribution of individual workers cannot be calculated, i.e., construction work.
SuitabilityO Work can be measured accurately, e.g., production of standardized goods in the factory.O When the quantity of output depends directly upon the skill and efforts of the worker.O Repetitive jobs.O Quality and workmanship are not very important.