Piece-Rate Pay Has Ups, Downs for Garment Workers

Source: https://sourcingjournal.com

The piece-rate system, which pays workers according to the number of units they produce, can be a mixed bag for those in the garment industry in general and the “partial” pieceworker in particular, a new study has found.

Compared with hourly or salaried workers—or even full-time pieceworkers—garment workers who are paid partially by the unit are more likely to be weighed down by concerns about sexual harassment, verbal abuse and workplace injuries, according to the Better Work Programme, a partnership between the International Labour Organization (ILO) and the International Finance Corporation to improve labor standards and competitiveness in the global supply chain.

The partial pay system, Better Work notes, is a hybrid of the hourly and piece-rate systems. Workers typically receive an hourly base salary—“usually very low”—along with an output-based incentive pay that activates only after a certain threshold has been achieved.

Drawing on data from roughly 6,000 workers employed in ILO-IFC Better Work factories in Vietnam, Indonesia, Jordan, Haiti and Nicaragua, researchers found workers whose wages were split between partial and full piece-rate experienced “detrimental effects,” unlike their full piece-rate counterparts, who were “not negatively impacted.”

The disparity suggests that uncertainty or unpredictability might be the “driving factor” behind partial piece-workers’ complaints, said Floriana Borino, a research economist at the World Trade Organisation and lead author of the study.

“Workers who are on a combination of pay types are concerned by the variability of their wages and a lack of transparency in how their wages are put together,” she said. “These concerns can lead partial piece-rate employees to work much harder, sometimes making their employment more strenuous and impacting their emotional and physical health.”

Partial piece-rate workers reported being less comfortable seeking help from supervisors and are less likely to be treated fairly and respectfully by their supervisors.

Although piece-rate workers can earn more on an hourly basis compared with their fixed-rate counterparts because “this type of contract induces higher level of effort,” workers paid partially by the piece are more concerned about lower than their timed colleagues, Borino said.

“This could be due to the higher variability of wages of partial pieceworkers, notably when the base salary is very low and the incentive pay, based on the output, is obtained only if a certain (high) output threshold is reached,” she said. “Another reason for partial piece-rate workers being concerned on low pay is the lack of transparency in piece-rate setting, leading employees to mistrust the employer and believing that piece rates will be lowered.”

Partial piece-rate workers are more susceptible to abusive treatments—sexual harassment from supervisors who may try to extract a portion of the piece-rate incentive in the form of sexual favors, for instance, or verbal abuse from overseers in charge of reporting output and productivity. They also report lower life satisfaction, Borino said.

Piece-work can benefit both employers and workers, Better Work said, but it hinges on how the system is designed and whether it’s regularly maintained afterward.

To be “fair and effective,” Borino said, piece-rate systems should be simple and transparent, reward employees according to the difficulty and quality of their work and ensure that motivated workers earn substantially more than the minimum wage.

“Involving employees before implementing a piece-rate pay system will increase transparency and confidence, so a crucial role should be played by trade unions,” she said. “To tackle the decent work deficits of piece-rate workers and improve their work conditions, it is crucial for government to regulate piece rates and piece-rate work and for enterprises to implement sound piece-rate systems.”

Piece rate can be a “win-win” for both employers and workers, but it needs to be designed in a fair way that is consistent with decent work objectives, reiterated Patrick Belser, a senior economist at the ILO and the principal editor of the ILO Global Wage Report.

“Involving workers and trade unions in the design of pay regimes will go a long way to offset some of the negative impacts of piece-rate wage systems,” he said. “There is also a role for governments to provide a robust legislative framework and to ensure that all workers, including those who are paid piece rates, earn at least the minimum wage.”



Categories: Asia, Business, Indonesia, Textile, Vietnam

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