Explain any four disadvantages of Piece Rate System of Wage Payment.
Answers
The fixation of piece rates is not an easy job. If a low rate is fixed then workers may not feel encouraged to increase their production. When a high piece-rate is fixed then it will increase the cost of production of goods.
Answer:
What is piece rate system
piece-rate pay system means that the worker is paid per unit of creation. Whether the "unit of creation" is a clay pot or a piece of writing, a person is paid by individual output, no matter how long it takes. Although at first glance working by piece-rate may seem easier, the piece-rate pay system has advantages and disadvantages that you should consider. This way, you can determine if this is a system you're willing to work with.
Advantages
Time Efficient
Paying a worker by output encourages the worker to manage time so as to increase the output. This also warrants less supervision, as the worker is already incentivized to work harder.
Production Efficient
When paid per piece, workers tend to develop and adhere to the most efficient means of production. Workers have a vested interest in achieving the company’s goals in the most efficient way possible, because they're achieving more both for the company and for themselves.
Cost Accountable
It's easier to calculate the cost per unit, because it's easier to factor in the cost of labor. Calculate the time spent producing the product, which is the labor, and then add materials and shipping, and you can see that it's easy to arrive at a transparent manufacturing cost.
disadvantages
Hindered Production
It's virtually impossible to predict how much product can be created within a set time under this system, because the system doesn’t easily lend itself to regulating and encouraging a production line.
Sick or Injured Workers
Working for piece-rate pay means that workers might come to work when they are ill, thereby risking the health of their coworkers. This could shut down or seriously reduce production output. Additionally, depending on the materials and equipment, if workers are working too quickly in an attempt to produce more, workers could potentially injure themselves, which could open up the company to liability.
Reduced Quality
When the focus is on quantity, the output the quality may suffer. Such a system requires dedicated employees who are determined to learn their craft thoroughly and then to increase the output. Employees are human, however, and it can be difficult to work at a rapid pace over a long duration. This can mean that employees may continue to work at a rapid pace but that production may produce items of reduced quality.
Explanation:
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