Piece rates and productivity

In many sectors and factories, notably in the garment sector or packaging department, workers are paid on a piece rate basis. This is supposed to act as an incentive to increase productivity.

The problem is that the targets for piece rates do not necessarily correspond to what most workers are able to deliver. Moreover, in some instances, overtime work is not paid at all if workers do not reach the target. In these cases, workers are simply paid the minimum wage despite the fact that they may have worked numerous overtime hours, thus violating the provisions of the Labour Law relating to overtime.

It is claimed that for “good performers” (workers with a high production output), piece rates are supposedly more advantageous than hourly rates. However, this assertion is impossible to verify because nobody other than the management knows the rate paid for a piece (it depends on the piece, as well as the stage of production, the piece rate decreasing once workers are more familiar with the production process), and because it is often difficult to know exactly how many pieces each worker has contributed to.

Piece rates are also problematic when it comes to managing the risks of hazardous jobs or work stations. Indeed, such rates can make it difficult for workers engaged in repetitive manual tasks to change job from time to time to prevent occupational disease. This is because experienced workers in specific positions would lose income by working in another job in the production line.

Source Report by The International Federation for Human Rights (FIDH) in collaboration with China Labour Bulletin, 'China’s workers are calling for change. What role should brands play?' May 2013
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