A Business Encyclopedia

Merrick Differential Piece-Rate System

Definition: The Merrick Differential Piece-Rate System is a modification of Taylor’s differential piece-rate system in which three piece-rates are used to distinguish between the beginners, the average workers, and the superior workers, against two piece-rates in Taylor’s system.

The worker is paid the straight price rate up to 83% of the standard output, 10 % above the normal rate for producing between 83% – 100% and 20% above the normal rate for producing more than 100% of the standard output. Here also, the minimum wages of the worker are not guaranteed.

The Merrick Differential Piece-Rate System can be illustrated by the example given below:

Standard Output = 200 units
Piece-rate = 10 paise

Case (1): Output = 160 units
Efficiency = 160/200 x 100 = 80%

Since the efficiency is less than 83%, the worker is paid only the basic rate, i.e. 10 paise. Thus, earnings will be Rs 8 (80 x 0.1).

Case (2): Output= 180 units
Efficiency = 180/200 x 100 = 90%

As the efficiency is more than 83% but less than 100 percent, 10% above the normal rate is paid to the worker. Thus,
Earnings = 90 x 110/100 x 0.1 = Rs 9.9

Case (3): Output = 220 units
Efficiency = 220/200 x 100 = 110%

As the efficiency is 110%, 20% above the normal rate is paid to the worker. Thus,
Earnings = 110 x 120/100 x 0.1 = Rs 13.30

Note: Under Merrick differential piece-rate system the workers are not penalized for producing below the standard output up to 83%.

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