LABOUR COST

BY- CHINTAN PRAJAPATI

LABOUR
⚫Labour or manpower represents human resources
used in production.
⚫Employees of an enterprise including temporary, part
time and contract employees.
⚫Labour cost is of two kinds:
⚫Direct labour cost
⚫Indirect labour cost
Labour Remuneration
⚫Used to cover the total monetary earnings of
employees.
⚫Includes wages according to time or piece basis and
other financial incentives.
Requisites of a satisfactory labour
remuneration system
⚫ Produce the best quality and quantity of work
⚫ Satisfactory from the point of both employees and employer
⚫ Scheme should be clearly defined and intelligible to workers
⚫ Guarantee for minimum living wage to each worker
⚫ Earnings of the workers should not be affected by matters
beyond their control
⚫ Reduce labour turnover and labour absenteeism
⚫ System should be flexible
⚫ System should be capable of operation without excessive
clerical work
Methods of remuneration
⚫Time rate system
⚫Wages= No. of hours worked * Rate per hour
⚫Piece rate system
⚫Wages= rate per unit * No. of units produced
Incentive plans
⚫ Principles of good incentive scheme
⚫ Simple and easily understandable
⚫ Fair to both employees and employer
⚫ Cost of operating the scheme should be reasonably low
⚫ Standard of performance should be scientifically set
⚫ No upper limit for earnings
⚫ Scheme should have the approval of workers and the union.
⚫ Earnings of the workers should not be affected by matters beyond their
control
⚫ Satisfactory system of supervision and production control
⚫ Standards once set should not be changed
⚫ Scheme must be relatively permanent
⚫ Indirect workers should also be included under the incentive scheme.
Halsey plan
⚫Bonus= 50% of (time saved* time rate)
⚫Total earnings= time rate* time taken +50% of (time
saved* time rate)
THANK YOU…..