What is the payment method known as 'piece rate'?

The payment method known as 'piece rate' refers to the compensation given to workers based on the number of items they have produced or tasks they have completed. This system is commonly used in industries where output can be easily measured, such as manufacturing or agriculture. By paying workers a set rate for each individual piece or unit produced, businesses incentivize higher productivity, as employees can directly see a correlation between the quantity of work they put in and the income they receive. This method can motivate employees to work more efficiently and effectively, as their earnings increase with their output.

In contrast, payment based on an annual salary does not provide direct motivation linked to productivity. Commission based on total sales relates more to sales-based jobs rather than production-based work. Payment through company stocks involves long-term investment and ownership stakes, rather than direct payment for work or productivity. These distinctions highlight why the piece rate is specifically defined as payment for completed items produced.