Question

Explain the time rate system of wage payment.

Answer 1

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

For example, a wage rate of 70 per day is fixed in an industrial unit. Two workers A and B, attend work for 28 and 16 days, respectively. The wages as per the time wage system will be 1960 and 1120 for A and B, respectively. This method of wage payment does not give weightage to the number of goods produced by the workers.

The supervisor may ensure that workers do not waste their time and the quality of goods is also maintained. There are no hard and fast rules for fixing rates of wages. These may be decided according to the level of the past; higher positions may be paid higher rates and vice versa.

Wages are calculated in the method as follows:

Earnings = T × R, where T stands for time spent and R is the rate of pay.