Time Wage System

Introduction to Time Wage System

The system within which the payment is made to the workers as per to the time for which they work is termed as Time-wage System. The time-rate is set before hand and workers are remunerated for the hours of work complete by them. For instance, an employee must work for 8 hours every day in a factory and the rate per hour fixed through the management is Rs. 2; the entire remuneration per day shall be Rs. 8 × 2 = Rs. 16. The payment can be made as per to the rate per hour, day, week, fortnight or month.

There is an assurance provided to the worker that he will obtain a fixed minimum for a particular period of time. Because the method relies on time worked, no account is taken of the quantity and quality of work completed. The straight time-wage system, although is a very old system, holds its own even today.

This method is appropriate in the following cases:

(i) In which strict supervision is possible.

(ii) In which quality of output has a greater role to play quantity.

(iii) In which it is not feasible to measure the work done.

So, the time-basis of making wage payment is best suitable to those industries in which efficiency of a worker does not contain a significant role to play in the speed of production.


1. The employer as well labour can simply understand this system, and amount of wages to be paid can be measured without any tiresome mathematical calculations.

2. Wages are not associated to the quantity and quality of the work completes. Daily, Monthly and hourly rates are fixed and labourers are make sure of a specific amount of wages to be received after specific period. In case work is interrupted because of failure of power or technical fault in machine, the labourers required not worry. So, they feel a sense of security also.

3. Because wages are fixed the worker is not quick and he makes use of best of his talents to make a quality production. So, quality is not sacrificed for quantity.

4. This technique is economical also. Detailed records considering the work done through the labour are not needed. This results in economy of administrative overheads.

Furthermore, the workers do not attempt to be hasty in doing their work. The meaning of this is that they use material and plants very carefully to make goods of the best quality. Care in make use of material and plants influences significant economy.


1. No difference is made among efficient and inefficient workers. They are treated similar and so there is not inducement for hard work.

2. The workers become dull and lazy try to avoid work and so production suffers.

3. "Delaying is the general practice followed through workers while the time-wage system is followed in a firm. The workers make sure to make the work last as long possible so that earnings might be greater. So, labour cost per unit is increased.

4. There is a discontentment between the efficient workers for there labours are not properly considered furthermore; the system might also lead to employer-employee trouble because the interest of the two conflict. Employer is interested in greatest production when the workers are interested in greatest earnings.

5. A close supervision is required. Appointment of additional supervisors raises cost of manufacture. Some alternatives of time wage system are used occasionally to overcome the shortcoming of straight time wage system. These are as follow:

(i) High wage plan. Within this plan a worker is paid a rate, normal higher than the prevailing in the area or in the industry. It makes sure higher level of performance from him.

(ii) Differential Time Rate. In case of this plan dissimilar hourly rates are determined for dissimilar levels of efficiency.

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