When wages are paid on that basis of the output of the workers without considering the time taken in performing work, it is termed as piece wage. Thus under this system, the workers are paid on the basis of quantity of work done, i. e. s, per unit of output, per article, per job, commodity , etc. For computing total remuneration of workers, a predetermined rate unit of output is multiplied by the total units produced. The rate is fixed a with the of time and motion studies.
The formula for wage computation under this system is:
Wages = Number of units produced × Rate of wage per unit Suitability of Piece Rate System
Piece rate system of payment of wages is considered suitable:
• Where the quantity of work done can be precisely measured and standardized,
• Where the work is of repetitive nature.
• Where it is possible to fix a fair and acceptable piece rate.
• Where the productivity is closely related to skill and efforts.
