The document discusses different wage systems and incentives used in industries. It describes the time wage system and piece wage system, including their merits, demerits, and when each system is most effective. It also outlines different types of monetary incentives like profit-sharing, bonus, and commission as well as non-monetary incentives such as promotion, recognition, and welfare activities that are used to motivate workers.

1. Wages And Incentives
Wages:
Wages is the return given to workers for their mental and physical efforts which they
put into the production process.
Elements of an Ideal Wage-System:
Guarantee of minimum wages.
Based on ability of the worker.
Simple.
Motivating.
Flexible.
Regular payment.
Types:
Time wage system
Piece wage system
Time Wage System:
In this system, the workers are paid wages according to the time spent at the work
place. E.g. a day, a week. A month etc. In this system, the work or production done by
an employee is not taken into consideration.
This is the oldest type of wage system.
Merits:
Clear and simple.
Provides guaranteed minimum wages.
Quality is maintained.
Haste is avoided and hence improper and excessive use of machinery is avoided.
Suitable for industries where measuring output is impossible.
Wages payable are pre-determined.
Workers are not exploited which help to maintain harmonious relationship.
Workers are motivated to work efficiently.
Reduces labour turnover rate.

2. Demerits:
Fails to motivate efficient and industrious workers.
Work needs supervision. Thus, cost of supervision increases.
Possibilities of the worker being negligent towards work or production.
Conflict and jealousy between efficient and inefficient workers crops up.
Nurtures the evil of shirking work.
Cannot be considered a progressive wage system.
When is time wage system effective?
Quality of production is more important than the output.
Work is to be done minutely, requiring extreme care and preciseness.
Impossible to assess individual performance.
Production is automatic i.e. machine-based.
Workers are new, apprentices or trainees.
Volume of production cannot be clearly measured.
Piece Wage System:
In this system, wages are paid to workers according to their output. This wage system
is directly related to the skill, production capacity, speed and precision of the worker.
This system is also known as ‘PAYMENT BY RESULT SYSTEM’.
Merits:
Worker’s skill is taken into account.
No need for supervision and inspection.
Efficient workers are given more incentives and rewards.
Easy to estimate the cost per unit.
Easy to calculate wages.
‘More production and best results’ is the motto of this system.
Demerits:
Quality is not maintained.
Workers intentionally ignore safety rules, inviting accidents.

3. Workers are paid different wages with a wide gulf among them leading to less precision,
lessening of their morale and industrial disputes.
Trade union oppose this system.
Sense of job satisfaction is less among workers.
Administrative expenses are high.
Workers neglect their health in order to put their maximum efforts.
Workers feel a sense of insecurity.
When is Piece Wage System Suitable?
Measurement of units produced is easy.
Efficiency, skill and concentration of worker is high and productivity depends upon
proficiency alone.
Easy to establish standards and flow of work is regular.
Only one type of goods are produced.
Incentives:
Incentives are an additional remuneration payable to efficient workers for their
meritorious performance in terms of time, costs and quality to motivate them to be
more productive.
Incentives create aptitude for work among the workers, increasing their productivity.
In the absence of incentives, lethargy, inflexibility, frustration and indifference of the
workers leads to inefficiency in the long run.
Types:
Monetary incentives
Non-monetary incentives
Monetary Incentives:
Money is the main element of incentives. It boosts the enthusiasm and self-confidence
of the workers. It provides the workers with economic security and gives the worker a
social security.

4. Types of Monetary Incentives:
Profit-Sharing
Co-Partnership
Bonus
Suggestions and Advices
Commission
Prizes
Non-Monetary Incentives:
Incentives not based on money are non-monetary incentives. Non-monetary incentives
are useful in increasing production and efficiency.
Types of Non-Monetary Incentives:
Security of employment
Recognition of food qualities.
Promotion
Adviser
Assignment of responsibility
Welfare activities and ammenities
Other incentives such as housing facilities, life insurance, educational and conveyance
allowances etc.