Question

State any three advantages of the Piece rate system of wage payment.

Explain the advantages of the piece-rate system of wage payment.

State any three merits of the Piece Rate System.

Answer 1

There are various advantages of Piece rate system of wage payment:

• Reward efficient workers.
• Less Supervision required.
• It discriminates between efficient and inefficient workers.

Answer 2

There are various advantages to the piece rate system of wage payment:

1. Incentive: This system motivates workers, as their reward is directly tied to their efforts. Workers understand that merit is acknowledged, which encourages them to work harder to improve their earnings and chances for promotion. As a result, there is no risk of workers using slow-down tactics or being negligent in their duties.
2. Economy: Since workers are driven to increase their output, the need for constant supervision is minimised. Overhead costs are distributed across a higher volume of output, leading to a reduction in the per-unit cost of production.
3. Modernisation: Workers actively support the management in installing new and improved equipment and other initiatives aimed at boosting efficiency. Management is consistently pressured to maintain and enhance operational efficiency.
4. Labour cost control: It is easier to determine the labor cost per unit because wages are directly linked to the output. The piece-rate system not only simplifies labor cost measurement but also allows for better forecasting and effective control of these costs.
5. Production planning and control: Management can plan and control production more accurately. Output targets can be set and achieved more effectively.
6. Employee development: Inefficient workers can be easily identified based on their performance. Appropriate training can then be provided to help them become more efficient.