ADVANTAGES OF PIECE RATE SYSTEM OF WAGE PAYMENT

Piece rate system is a method of wage payment where workers are paid according e amount of

work done.

The following are advantages or Merits of piece rate system

Eliminates the need for constant supervision of the workers leading to reduced costs of production.
Minimizes labour strikes (industrial unrest) because it limits conflicts or disagreements over payments.
Higher output is realized because workers are encouraged to produce more so as to earn high wages.
Promotes team work / spirit among the workers leading to increased productivity.
Workers do the work at their own pace thereby reducing overstraining.
It is easy to calculate the wages because output is measurable.
Dull and slow workers are stimulated to work hard in order to earn high wages.

Encourages innovativeness among workers so as to produce a large output of and services to earn high wages.
Faster workers earn more wages than slow / lazy workers which minimises seating in the payment of wages.
Employers easily forecast output to be produced by the workers and this enables them to put aside the necessary amount of money for wage payment, that is, it simplifies employers costing calculations.
It helps employers in identification of suitable workers by enabling them to remove the lazy ones and maintain workers who put in more effort.
Tasks are completed faster since the system encourages hard work among the workers.
Employers are protected from falsified payments since wages are directly related to the level of output.
Output is increased and the cost per unit of a fixed factor of production employed reduces.
Demerits of piece rate system
Workers tend to over work themselves to earn high wages and this negative affects their health.
Reduces the quality of work because of hurried work for higher pay.

Leads to over production due to high output rates resulting into wastage of resources.
A worker who genuinely misses work or falls sick is not paid for the missed. This causes wage / income instability.
Hard working people are resented by the slow workers leading to conflicts arc income inequality.
Leads to high risks of accidents because workers try to increase the speed of work for higher wages.
It undermines trade union solidarity because of variations in piece rates one place to another and due to the conflicts between the hard working people the slow workers.
Slow but careful and efficient workers are discouraged since they produce output levels (and good quality output in a long time) that earns them low wages.
Workers may resist being transferred from one form of work where they acquired more experience to another.