Methods of Wage Payment
Methods of Wage Payment
Methods of Wage Payment
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3. Both employers and workers know well in advance the amount of wages payable and they can adjust their budgets accordingly. 4. It ensures the payment of regular and specific wages which is beneficial from social point of view. 5. Product/service quality tends to be high as workers are not in hurry to produce more without regard to quality.
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4. Labour cost of production becomes difficult to determine in advance because wages are not linked to output. 5. Since productivity is not a criterion for fixing wages. there is a possibility that wrong employees are placed on the job.
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4. It. requires less supervision if there is in-built system for product quality control. 5. The organization can estimate its cost of production well in advance because wage cost is directly proportional to output.
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4. The product quality and machinery conditions are likely to suffer because workers concentrate more on quantity rather than quality. 5. There may be jealousy and interpersonal conflict among workers because of their uneven earnings at the same workplace. 6. Trade unions generally oppose this system because of the fear of discrimination among workers based on their working.
3. Balance Method
Balance method also known as debt method, is essentially a combination of time wage and piece wage methods. Under this method, a worker is guaranteed a fixed wage based on time rate with a provision of piece wage method. Thus, if a worker produces more quantity in a period, usually on weekly or monthly basis, and earns more than his time wage, he is given credit for additional output which is compensated in another period in which production quantity falls below the time wage.
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This method provides a sense of security to a worker so far as his wage earning is concerned. At the same time, he is also motivated to produce more because of inclusion of piece wage system. This method has its relevance in a workplace where the work flow is irregular like docks.