Taylor Piece Rate System
Taylor Piece Rate System, as the name suggests, was developed by F.W. Taylor in 1884, he first applied to the Medieval Steel Company, in which he was an employee. Under this system, the work of each worker and the duration of time of its completion are fixed in advance. The workers who complete more than the predetermined amount of work in the given time are provided with higher wages; while the workers who complete less than the given work in the given time are provided lower wages. Thus, the efficient workers get more wages and the less efficient get lesser wages under this system.
Example: If the fixed output per day of a company is 10 units and the wages are fixed at $10 per unit for efficient workers and $8 per unit for less efficient workers, then for 12, 10, 8 and 6 units, wage rates will be as following
|Worker||Output||Wage per Unit||Total Wage|
Merits of the Taylor Piece Rate System
- Workers work at their full capacity.
- The labour is aware of the rate of wages and the amount of work beforehand, hence he tries to increase his production above the set standards.
- There are no wage cuts as in other systems rather the policy of more production, the more the wages are followed.
Demerits of the Taylor Piece Rate System
- This system does not differentiate much on the basis of efficient and less, efficient workers.
- There are no minimum wages fixed, as in the case of the Time Wage System.
- On additional production, the worker’s wages are increased at the normal wage rate only.
- This system encourages the workers to produce more; in which case, the workers neglect the quality of the product.