A Business Encyclopedia

Straight Piece-Work System

Definition: The Straight Piece-Work System is the simplest incentive method in which the rate per unit of output is fixed, and the earnings of the worker are computed by multiplying his total output by the rate per unit.

In other words, a system in which the worker is paid according to the number of units produced at a fixed rate per unit during a defined period of time is called a straight piece-work system. Here, the earnings of a worker depend directly on his performance (measured in units). Such as, if the per unit rate is 10 Paise and the total output is 1000 units, then his earnings will be 0.10 x 1000 = Rs 100.

In the case of a price-rate system, the worker has to even go without the wages if the output falls below the defined level of output. Thus, in order to safeguard the interests of the workers the straight piece-work system is modified in one respect, i.e., the time-rate of a worker is also guaranteed. This means worker’s earnings are computed by multiplying the time taken by per unit of time. The time-rate is usually set at a level that yields earnings below the average earnings on piece-work in average conditions. It is designed to protect the worker against the low earnings due to the causes beyond his control.

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