Question

State the circumstances in which time rate system of wage payment can be preferred in a
factory. What are the advantages of this system?

Answer 1

Time rate system

Time is made a basis for determining wages of worker. Under this system, the wages are paid according to the time spent by workers irrespective of his output of work done. The wage rates are fixed for an hour, a day, week, a month or even a year.

The circumstances in which time rate system of wage payment can be preferred in a factory are:

(1) When productivity of an employee cannot be measured precisely.

(2) Where quality of products is more important than the quantity produced.

(3) Where individual employees do not have any control over production.

(4) Where close supervision of work is possible.

(5) Where work delays are frequent and beyond the control of workers.

Advantages:

1. Simplicity:

The method of wage payments is very simple. The workers will not find any difficulty in calculating the wages. The time spent by a person multiplied by the rate will determine his wages.

2. Security:

Workers are guaranteed minimum wages for the time spent by them. There is no link between wages and output, wages are paid irrespective of output. They are not supposed to complete particular task for getting their wages. They are sure to set certain wages at the end of a specified period of time spent in working.

3. Batter Quality of Products:

When workers are assured of wages on time basis, they will improve the quality of products. If wages are related to output, then workers may think of increasing production without bothering about quality of goods.

In this method, workers will concentrate on producing better quality of goods. In certain situations, only time wage system will be suitable. If some artistic nature products are produced, then this method will be most suitable.

4. Support of Unions:

This method is acceptable to trade unions because it does not distinguish between workers on the basis of their performance. Any method which gives different wage rates or wages based on output is generally opposed by trade unions.

5. Beneficial for Beginners:

Wage rate system is good for the beginners because they may not be able to reach particular level of production on entering employment.

6. Less, Wastages:

The workers will not be in a hurry to push through production. The materials and equipment’s will be properly handled leading to less wastage.

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