CPE 3100 Industrial management Wage Payment Systems

Wage Wage derives from words which suggest "making a promise," often in monetary form. Wage: a reward for work done. Also compensation for labour offered. In the US, wages for most workers are set by market forces else by collective bargaining, where a labor union negotiates on the workers' behalf Or The Fair Labor Standards Act establishes a minimum wage

Wage Payment Systems  are the different methods of labour remunerations adopted by companies / organizations: Viz;  Time Rate Systems  Payment by Results / Piece Rate System

Time Rate Systems  Under this system, the worker is paid by the hour, day, week, or month. Time rate systems are of various forms. Thus;  High Wage plan: a worker is paid a wage rate which is substantially higher than the rate prevailing in the area or in the industry. In return, he is expected to maintain a very high level of performance, both quantitative and qualitative.  Measured day work: According to this method the hourly rate of the time worked consists of two parts viz, fixed variable

Time Rate Systems cont,,,  The fixed element is based on the nature of the job i.e. the rate for this part is fixed on the basis of job requirements  The variable portion varies for each worker depending upon his merit rating and the cost-of-living index  Differential time rate  different hourly rates are fixed for different levels of efficiency.

Payment by Results/ Piece Work Two types. Viz;  Straight piecework system: The wages of the worker depend upon his output and rate of each unit of output; it is in fact independent of the time taken by him.  Differential piece work system: This system provides for higher rewards to more efficient workers. For different levels of output below and above the standard, different piece rates are applicable. – Taylor Differential Piece Work System – Merrick Differential Piece Rate System

Payment by Results/ Piece Work cont……. Taylor's differential piece rate system: introduced by Taylor, the father of scientific management. This system introduced to penalize a slow worker by paying him a low piece rate for low production and to reward an efficient worker by giving him a higher piece rate for a higher production. Thus if a worker completes the work within or less than the standard time, he is paid a higher piece rate and if he does not complete the work within the standard time, he is given a lower piece rate.

Payment by Results/ Piece Work cont……. Merricks multiple piece rate: Under this method, three piece rates are applied for workers with different levels of performance. Wages are paid at ordinary piece rate to those workers whose performance is less than 83% of the standard out put. 110% piece rate is given to workers whose performance is between 83% and 100% of standard. 120% of ordinary piece rate is given to those workers who produce more than 100% of the standard output.

Payment by Results/ Piece Work cont…….  Halsey premium plan: Under this method standard time is fixed for the job and worker is given wages for the actual time taken to complete the job at the agreed rate per hour plus a bonus to one half on the wages of the time saved.  Total wages = T x R + % (S - T) R  Where, T = actual time, R = Rate per hour, S = Standard time, % = 50% otherwise mentioned in the question./ scenario

Combination of Time and Piece Work  Gantt task and bonus system: the system consists of paying a worker on time basis if he does not attain the standard and on piece basis (high rate) if he does.  Emerson’s efficiency system: Under this system minimum time wages are guaranteed. But beyond a certain efficiency level, bonus in addition to minimum day wages is given

Wage determination  Depending on the structure and traditions of different economies around the world, wage rates are either the product of market forces (supply and demand), as is common in the United States, or wage rates may be influenced by other factors such as tradition, social structure and seniority, as in Japan.  Several countries have enacted a statutory minimum wage rate that sets a price floor for certain kinds of labor.

The Enterprise Labour Market 12 Direct Employment Contract Labour Sub-contracting Casual Labour Recruitment ProbationTrainingTurnover Initial training Retraining Upgrading Job Structure Home Workers Employment Service Applicants Vacancies

Flexibility and Security Structure 13 Differential Relations Regular Full-time Direct Employment Regular Part-time Probationary Casual Temporary Indirect Employment Contract Labour Sub-contractingHome Workers

Flexibility and Security Structure 14 Differential Relations Job Security Wages Benefits Income Security Employment Security Skill Reproduction Security Representation Security Work Security

Wage Flexibility Loop 15 Remuneration In-kind pay Fixed wage Bonus Tariff Collective bargain (Incentives, Profit share, Benefits) Arrears

Wage Flexibility Loop 16 Remuneration (cont’d) Incentives Profit share Benefits Form Entitlement Type, change Monetary Non-monetary % of pay