Types Of Payment of Wages

 There are two basic method of wage payment

  1. Payment by hours or day (Time rate system).

  2. Payment by result ( Piece rate system).

  1. Payment by hours or day (Time rate system).

         This is also know as time system. This system is most commonly used. In this system, the workers is paid wages for the time he spends on the work. Wages are paid at hourly ,daily, weekly or monthly rate.

         If worker work for N hours and his wage rate is R per hour, then the worker will be paid a wages of R x N. Here the wages do not depend upon the quantity  of output by the workers.

MERITS:

   1. The method is simple and easy for calculating wages.

   2. All workers are treated equally. Hence no jealousy.

   3. Workers do not hurry up to complete the work; so quality of work is maintained.

   4. This method is suitable for jobs where output cannot be exactly measured. ( Supervision,                          maintenance, etc.)

  5. If there is break down in production , the workers will not loose their wages.

DEMERITS :

   1. Efficient workers are not paid any incentives. The loose interest.

   2. Productivity is less because the workers may not work hard. They get their wages irrespective of              their output.

  3. More supervision is needed.

  4. Rate of output will be varying .so it is difficult to fix the production schedule.

  5. Overhead cost increase.

2. PAYMENT BY RESULT

        In this system of payment, the workers is paid proportional to his output. The standard output is fixed . when the workers produces more then the standard output , he will be paid additional wages. it is called incentive.

MERITS 

   1. It encourages all the workers to produce more.

   2. Productivity increases

   3. Efficient workers are paid more. so they are satisfied.

   4. production cost is less.

   5. Less supervision required.

   6. Workers take care of their tools and equipment so that their earning are not affected.

   7. Slow workers are not affected because there is minimum wage.

DEMERITS :

   1. Workers work in a hurry. So the quality of product will be poor. so more inspection is needed.

   2. Workers may over strain themselves to earn more. This will affect their health.

   3. Because of difference in wages earned, there will be jealousy among workers.

   4. Material wastage increases.

   5.Lead to more accidents.

  6. Clerical work for calculating the incentive increases.