The factors of production such as labour, land, capital and entrepreneurship have to be used in the production process; their returns of income are wages, rents, interest and profits respectively. Here are the payment methods of wages for labour.
Time-rate payment According to this payment method, workers are paid by a fixed and pre-determined wage per period of time, regardless of their output amount of productivity. Examples are typists, teachers, clerks and managers who are all paid by this method.
The following are factors favouring time-rate payment: 1. Workers do not normally accomplish their jobs alone. They require the co-operations and co-ordination of fellow workers because division of labour is practised in most firms.
As a result, it is difficult and costly to measure the exact amount of each worker's output. For example, a team will be involved in working out an advertisement project in an advertising agency, eg, designers, artists, cameramen, lighting and sound technicians.
The production of the advertisement depends on team work instead of individuals so it is impossible to separate or determine the effort contributed by each member of the team. Payment by a fixed amount regularly is less costly and easier to administer.
2. In certain types of jobs, a worker may have to carry out different tasks. The job nature is not regulary fixed so it would be very difficult to measure the value of each task. For example, an office assistant may have to type letters, send fax messages and answer phone calls during the working hours. It is difficult and time- consuming for employers to count each type of work the employees are involved in.