Differences Between Piece Rate System And Time Rate System Of Wage Payment

Following are the main differences between piece rate system and time rate system.

1. Meaning
Piece rate system is a method of wage payment to workers based on the quantity of output they have produced. Time rate system is a method of wage payment to workers based on time spent by them for the production of output.

2. Nature Of Payment
Piece rate system pays the workers according to the units of output produced. Time rate system pays the workers according to the time spent in the factory.

3. Emphasis
Piece rate system gives emphasis on larger quantity of output. Time rate system emphasis on better quality of output.

4. Discrimination
Piece rate system discriminates the workers and pays more wages to efficient and skilled workers. Time rate system does not discriminate the workers and pays the same wages to efficient and inefficient workers.

5. Supervision
Piece rate system requires strict supervision to get the required quality output. Time rate system requires strict supervision to get required quantity of output.

6. Determination Of Labor Cost
Piece rate system helps to fix per unit labor cost in advance. Time rate system does not help to fix labor cost per unit in advance.

7. Flow Of Production
Piece rate system does not bring uniformity in the flow of production and causes an excessive wastage of inputs. Time rate system helps maintain a uniform flow of production and ensures an efficient use of materials, tools and equipments.