Advantages of Time Rates

Time rates are the most widespread basis for renumeration, although they are often subject to modification by the application of certain features of work measurement technique (see page 6). The main circumstances in which pure time rates are appropriate are:

(a) where output cannot be measured (e.g. a local government officer);

(b) where rate of output is determined not by the individual but by the speed of a machine or process (e.g. operator of a canning machine);

(c) where quality of work or time taken per unit of output is not the primary essential (e.g. a door-keeper);

(d) where output is largely irrelevant (e.g. that of a trainee or learner);

(e) where safety and caution take priority over output (e.g. drivers of public service vehicles).

Pure time rates are broadly appropriate for the unskilled and the very highly skilled, and also for clerical, administrative and policymaking employees.

Disadvantages of time rates

The disadvantages of time rates include:

(a) lack of inbuilt incentive for efficient and rapid work;

(b) need for continuous supervision on the shop floor, necessitating grading of workers according to their efficiency (e.g. improvers, rank-and-file workers, team leaders, shift leaders, foremen);

(c) possible resentment arising from wage differentials between the various grades.

Time Rates Example

(a) Basic wage for a standard 38-hour week is £76. Overtime is paid at time and a half. Ten hours' overtime a week is guaranteed to be available. Five hours' overtime is compulsory.

(b) Basic wage for a standard week of 42 hours is £84. Overtime is paid

at time and a half. Eight hours' overtime a week is guaranteed, of which three hours are compulsory.

A person is willing to work 45 hours per week. Which employer will pay him the larger weekly wage?

Answer (a) £76 + (7 x £30) = £97

(b) £84 + (3 x £30) = £93

So (a) will pay... see: Time Rates Example

Personal And Business Finance 2018

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