Excerpt from The Payment of Wages: A Study in Payment by Results Under the Wage-System
The following chapters are an attempt to describe a particular aspect of the wage system. Under the existing industrial system every worker has his price and receives his payment for service rendered, and one of the most important questions arising between employer and employed is that of the basis on which this payment is to be made. Broadly speaking, there are two possible bases of payment within the wage-system - payment for time worked and payment for output. There are indeed all kinds of modifications and minglings of these two principles; but they are none the less fundamentally distinct. A worker may be paid in strict accordance with the time spent on the employers work at so much per hour, per day, per week, per month, or per year; or he or she may be paid in accordance with the work done at so much per piece, or per unit of effort. Again, the method of payment may be either individual or collective: the employer may deal separately with, and pay wages by time or output to, every worker individually, or a lump sum may be paid over to a single worker on behalf of a group, or to the group itself.
These two systems are, I have said, in principle distinct, however they may mingle in practice. But, to a very great extent, they do possess a common basis. A time-work system is never wholly without relation to output; for the employer inevitably expects a certain amount of work from the worker whom he employs, and if this amount is not forthcoming, he finds his remedy in discharging the worker. Payment by output, again, is never wholly without relation to a time standard; for piece-prices are invariably determined to a great extent by the income which constitutes the normal standard of life for the workmen concerned. This, however, is only to say that both time-workers and piece-workers are subject to the wage system.
This common basis of time payment and payment by output, however, does not remove their essential difference.
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