Production efficiency largely depends on the form of remuneration. What can be its forms? In general, there are two of them - piecework and time-based. All the rest are merely their varieties. With piece-rate pay, the worker receives remuneration directly for the work performed, and a simple time-based wage assumes that he will not receive money for the goods produced, namely for the hours he spent at the workplace.
It may seem that piece-rate payment is more profitable for both parties, but the fact is that many employers refuse it because they consider it not effective enough. The pros and cons of time-based wages will be discussed in this article.
Time wage
The wide distribution of this form is due to numerous circumstances. First of all, such circumstances should include scientific and technological progress, constantly changing the essence of production. Over the years, the division of labor is becoming more and more noticeable, the requirements for staff are being tightened. It is not always possible to evaluate the result of a particular employee, since the main emphasis is on collective work and, of course, on collective result.
In some cases, the production process is strictly regulated. The point is that an increase in production will lead to an increase not in profit, but in losses.
Yes, time wage has many advantages. The main ones include the fact that the employer does not have to spend a lot of time and money on enhanced quality control of products - employees are in no hurry and are doing everything in good faith. Workers feel part of the enterprise and understand that the well-being of others depends on their work. Time wage noticeably reduces staff turnover. Employees understand that by staying at the enterprise, they will receive a stable salary that will allow them to be confident in the future.
Time wage guarantees a relatively stable income. Everyone gets exactly what he is supposed to receive, which means that no one is trying to get around anyone in the details, hostility can be observed not so often.
Does time wage cause any problems and difficulties? Unfortunately yes. Do not forget that employees do not receive money for the work done, but for their actual presence on it. There are not so many incentives that can increase labor productivity . Quality control is not so important, but there is a need for control over the employees themselves. This entails considerable costs. Control in some situations may not be feasible. It is also important to note that the supervisors are able to conspire with workers who do not want to work as expected.
The necessary controls described above can cost the employer dearly. Where to get money for it? In most cases, cash is withdrawn from the salaries of the workers themselves. This is one of the main reasons that time wages are usually less than piecework wages.
In fact, the employer pays the employees not the work itself, but the hours during which they remain on it. Problems may arise if production is suspended for objective reasons. The point is that with broken equipment the worker will not be able to fulfill his immediate duties. True, almost always there is an opportunity to do something else, unlike his usual work. But still useful for the enterprise. Just do not forget that not everyone agrees to perform work not prescribed in the employment contract.