5. Increased production will not reduce the labour cost per unit because the same rate will be paid for all units. On the other hand, increased production will reduce the labour cost per unit under the time wage system. 6. Workers have the fear of losing wages if they are not able to work due to some reason. 7. Workers may work for long hours to earn more wages, and thus, may spoil their health. 8. Workers may work at a very high speed for a few days, earn good wages and then absent themselves for a few days, upsetting the uniform flow of production. 9. Workers in the habit of producing quality goods will suffer because they will not get any extra remuneration for good quality. 10. The system will cause discontentment among the slower workers because they are not able to earn more wages. This method can be successfully applied when: 1. The work is of a repetitive type. 2. Quantity of output can be measured. 3. Quality of goods can be controlled. 4. It is possible to fix an equitable and acceptable piece rate 5. The system is flexible and rates can be adjusted to changes in price level. 6. Materials, tools and machines are sufficiently available to cope with the possible increase in production. 7. Time cards are maintained so that workers are punctual and regular so that production may not slow down. S46 (b) Taylor's Differential Piece Rate system This system was introduced by Taylor, the father of scientific management to encourage the workers to complete the work within or less than the standard time. Taylor advocated two piece rates, so that if a worker performs the work within or less than the standard time, he is paid a higher piece rate and if he does not complete the work within the standard time, he is given a lower piece rate. Illustration 9 : Calculate the earnings of workers A and B under Straight Piece-rate System and Taylor's Differential Piece-rate System form the following particulars. Normal rate per hour = Rs. 1.80 Standard time per unit = 20 seconds Differentials to be applied: 80 % of piece rate below standard 120% of piece rate at or above standard. Worker A produces 1,300 units per day and worker B produces 1,500 units per day