Merits and demerits time wage system




This is the oldest method of wage payment. The time is made basis for determining wages of a person. The wages are paid according to the time spent by worker4s irrespective of his output of work done.

Merits of time wage system

1. Simplicity: -The method of wage payment is very simple. The workers will not find any difficulty in calculating the wages.
2. Security: - Workers are guaranteed minimum wages for the spent by then. There is no link between wages and output; wages are paid irrespective of output. They are not supposed to complete a particular task for getting their wages.
3. Better quality of goods: - When workers are assured of wages on time basis. They will improve the quality of goods. If wages are related to output then workers may think for increasing production without bothering about quality of goods.
4. Support of unions: - This method is acceptable to trade unions because it does not distinguish between workers on the basis of their performance.
5. Beneficial for beginners: - Wage rate system is good for the beginners because they may not be able to reach a particular level of production in the beginning.
6. Less wastage: - The workers will not be in a hurry to push through production. The material and equipotent will be properly handled without wastage.

Demerits of time wage payment

Time wage system suffers from the following drawbacks:-
1. No incentive for efficiency: - This method does not distinguish between efficient and inefficient workers. The payment of wages is related to time and not output. Thus, the method gives no incentive for producing more.
2. Wastage of time: - Workers may while away their time because they will not be following a target of production. Efficient workers may also follow slow workers because there is no distinction between them.
3. Low production: - Since wages are not related to output, workers may be producing at slower rate. The responsibility for increasing production may mostly lie on supervision.
4. Difficulty to determine labor cost: - Because wages are not related to output, employees find it difficult in determining labor cost per unit.
5. More supervision requires: - Under this system workers are not offered incentives for production. To get more work from them there will be a need for greater supervision.
6. Employer-employee trouble: - When all employee, irrespective of their merit are treated equally there is likely to be a trouble between management and workers.


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