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What are the types of Wage Rate System?

Wages is an amount which is given to a worker for his work. It act as a motivational tool which help worker to work efficiently and effectively.

In other hand if it is act as a motivational tool then it is also act as a tool to demotivate the workers if it is not distributed efficiently among them. If the efficient worker does not get the wage according to his work it demoralizes him and it affects his work performance in future.

So, there is a three types of wage rate system methods company uses to paid workers properly. With the help of this method company decides the wage rate according to which company paid to workers.

1.     Time wage rate system: Under this system the wages decided according to the working hours. If the worker works 5 hours then the wage rate is multiply with the working hour that is 5 hours and then the amount is paid to worker as his wage. In this system the quantity of goods produced is doesn't matter. A fixed wage rate is given to worker based to hours, weeks, monthly or daily basis. The quality of product or goods is considered in it. The close supervision is required in this system if company uses this system.

2.     Piece wage rate system: Under this system the goods produced is considered to pay wages to workers and the working hours doesn't considered in it. In this system wage rate is multiply with number of unit produced. The quality of product is not so important in a company. It is divided into three parts:

  • Straight Piece wage rate: It is a simple output based wage rate system which multi ply wage rate with number of unit.
  • Piece wage with guaranteed day wage rate: Under this method the guaranteed wage rate is paid to workers if workers piece wage rate is less than time rate wage then according to time wage rate workers received their wages and if piece wage rate is more than time wage rate. In that case piece wage rate according workers get their wages.
  • Differential Piece wage rate: Under this system different workers get different wages according to their work performance. Efficient workers get more wages in comparison to inefficient workers. It helps to motivate the workers to work efficient so, that they can also award with more wages. 

3.     Incentive wage system: Under this method both the piece wage rate system and time wage rate system both are combined to eliminate the limitation of both system and gets higher advantages with it. There are various incentive wage plans for workers to get more works from them in minimum time and use the sources efficiently. A standard is fixed for workers to measure their performance level and according to its proper wages are paid to them. Bonus are paid to efficient workers and guaranteed wages are paid to workers so, that they feel secure and work properly. Rewards are given to workers if they work before standard time and produced standard quality of goods.

 

 


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