Merits of Piece Rate Wage System

Question

What are the merits of Piece Rate Wage System?

Answer 1

Following are the merits of Piece Rate Wage System:

1 The main advantage of this system is recognition of merit, as efficient is rewarded, It is therefore more equitable then time rate system.

2 It pays workers as per their efficiencies, ability, capacity or performance, so it gives direct stimulus and motivation to the employees for extra efforts, which may result into more output.

3 It requires less managerial supervision as total remuneration depends upon units produced, and not on time spent in an organization.

4 Being interested in continuity of his work, a workman is likely to take greater care to prevent breakdown in the machinery or in the work shop. It is a gain to the management since it reduces maintenance expenditure in an organization.

5 As the direct labor cost per unit of production remains fixed and constant, calculation of cost while filling tenders and estimates becomes easier.

6 It results in to not only increase in the output and wages ,but the methods of production too are also improved, as workers demand material and tools free from defects and machinery in perfect operating condition.