Advantages of Piece Rates
Source of the main advantages of piece rates are as follows.
1. The employee has a major incentive to increase his production. Under pure time rates any benefits from higher production accrue only to the employer; under modified piece rates benefits are shared by employer and employee.
2. Setting targets for output provides a form of job satisfaction, especially where the task, being essentially repetitive, does not itself provide any sense of achievement.
3. The potentially high earnings attract efficient workers.
4. There is less need for supervision, although quality control becomes more important.
5. The individual has more scope for pride in his work.
Disadvantages of piece rates
There are certain disadvantages of piece rates. They include the following.
1. Complicated systems of calculation are hard for the worker to understand.
2. Earnings, although generally higher, can be less stable, predictable or secure.
3. The guaranteed basic pay is usually lower than it would be under pure time rates.