Explain Piece Rate System

[laji]

What is meant by Piece Rate System? what are its merits and demerits?

[nbm]

According to the piece rate system, a worker is paid for the amount of work performed rather than fixed per unit of output measured in terms of units of production. The wages payable to a worker under this system is calculated by the formula:
NXR where, N -- Number of units produced
R = Wage rate per unit of product Piece rate wages are applicable to repetitive jobs which can be readily measured, inspected and counted.

Merits
1. It motivates the hard working labourers to work more and earn more.
2. It helps in speediating production.
3. In the case of excessive work, the 'work load' can be distributed among other workers.
4. Less time consumption is felt.
5. It requires less supervision because the workers are themselves in hurry to do all.
6. Employers are protected against lazy and idlers through this system.
7. It avoids frequent industrial disputes which otherwise are inevitable.

Demerits
1. Payment under this system is irregular and uncertain and thus creates uncertainty in the life of workers as well as he feels unable to maintain a desirable standard of life.
2. During the periods of illness, or disability, the worker is not paid any amount, whereas infact, during these periods monetary need becomes more passing.
3. The system consumes enough time and space because huge and varying records are to be kept by the employers.
4. Too much emphasis on the quantity of production may lower the quality of products.
5. The establishment of piece rates is difficult and often becomes a source of grievances on the part ^>f workers. Without undertaking time and motion study and having past experience, piece rate maybe set
at so low a level that it exercises a demoralising effect on the workers.
6. Differences in earnings cause dissatisfaction and resentment among workers. Trade unions arc- openly opposed to this system of wage remuneration, as this from of wage payment encourages rivalry between workers and endangers solidarity of labour unions.
7. In their eagerness for increased earnings workers may exert themselves to the point of exhaustion so to undermine their health and efficiency.

Suitability—The system of piece wage rate is suitable in following cases:
(1) Where the work is of standardised and repetitive character.
(2) Where there is an urgent need to increase production.
(3) Where units of output are measurable.