Notable drawbacks or disadvantages of piece rate system are as follows:
1. Less Focus On Quality
Piece rate system pays on the basis of output or quantity. So, employees are focused to earn more by producing more. So, there is a chance of producing low quality products.
2. Health Effect
Due to the excess effort to produce more for more wages, workers may suffer from stress and other adverse health effect.
3. No Fixed Minimum Wages
Piece rate system does not guarantee fixed minimum wages to the employees. So, new and unskilled workers suffer from it. Workers lose wage if they are absent or cannot do their job due to some reason.
4. High Supervision Cost
Piece rate system requires high supervision costs to maintain quality of output and working standard.
5. Low Profitability
In piece rate system, quantity of production is given preference rather than the quality. So, profitability may be affected because of low quality of product.
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6. Not Preferred By Trade Unions
Piece rate system does not guarantee minimum wages and forces the workers to work for long hours. So, it is not in the favor of trade unions.
7. Dissatisfaction Among Workers
New and unskilled workers are penalized by getting low wages. In other hand, efficient and senior workers do not get any reward. So, workers may not be satisfied with the management.
8. Wastage
Due to the temptation to earn more, workers pay less attention in proper use of materials and machines. So, there is high chance of wastage of materials and machinery breakdown.
