PresentationPresentation onon

Labour cost

Introduction

Labour cost represent the human contribution to production is an important cost factor which requires constant control, measurement, and analysis.

Types of labour Direct labour Indirect labour

How to control labour cost To attain the objective of controlling and reducing labour cost the

following factors must be kept in mind Appointment and selection of employees Maintain labour records Control over arrival and departure time of employees Labour cost analysis Determination and payment of wages

Major deptt.for effective conrolover labour cost

Personnel deptt. Main function of personnel deptt is recruitment and

selection of works providing training and placing them to jobs.Following are the two important documents used in connection with appointment & placement

a)Employee placement requisition

b)Employee history card

LABOUR TURNOVER

Labour turnover denotes the percentage change in labour force of an organization.The ratio of replaced workers to the total no of workers is the labour turnover ratio

Causes of labour turnover

MEASUREMENT OF LABOUR TURNOVER

3 methods are there:-

1)Seperation method:-

 

Labour turnover= no of employee left during period

____________________ *100

Avg. no of employees

During period

2)Replacement method:-

Labour turnover= No of workers replace during a period

_______________________ *100

Avg. no of workers during a period

3)flux method :- Labour turnover= no of separations + no of addition _________________________ *100 Avg no of employees during period

EFFECTS OF LABOUR TURNOVER

The turnover below normal rate is low turnover and turnover in excess of normal rate is high turnover

So, high labour turnover has following reasons:- a)intruption in production b)time wastages c)cost increase d)faulty handling of machines e)more accidents

REDUCTION OF LABOUR TURNOVER

  creation of distinction between efficient and

inefficient workers good working conditions non monetary benefits

Engineering deptt:-

This deptt maintain control over the product methods and working conditions for each job, deptt and process.

 

FUNCTIONS OF ENGINEERING DEPTT.

preparation of production peans inspection of production process undertaking research maintain safety conditions to prevent

accidents conduct time and nation study determination of rates according to time

TIME KEEPING DEPTT:-

it records the arrival and depature time of each workers .Time keeping is concerned with attendance & wage calculation of employees.Time booking means recording the time actually spent by a worker on various job done by him.

Labour time records used for time booking are:-

a)Daily time sheet

b)Weekly time sheet

c)job card

d)combined time &job card

e)piece work card

PAY ROLL DEPTT:-

Responsible for making payment of wages & salary to each employee

Functions are:-

1)to keep wage record for each worker

2)to verify time

3)to calculate wages earned by each employees

4)to make payment of wages

COST A/C ING DEPTT:-

responsible for collection and classification of all labour costs with the help of time cards, labour cost of various jobs, work orders etc.

IDLE TIME It is that time for which employees pay,but

from which he obtains no production.in other words idle time is time when the worker does no work and remains idle.

CAUSES OF IDLE TIME

lack of proper planning bad management serve competition trade depression time lost between gate and place of work waiting for rawmaterials etc.

Types of IDLE TIME

NORMAL IDLE TIME ABNORMAL IDLE TIME

NORMAL IDLE TIME:-

normal idle time is one which is incidental to production. it represents the time ,wastage of which cannot be avoided.

E..g.s:-1)time lost between gate & place of work 2)time lost between one job and other 3)time lost in setting machine 4)time require for tea-breaks etc.

ABNORMAL IDLE TIME:-

the idle time which can be avoided it proper precautions are taken .

E.g.s:- 1)idle time wasted due to strikes 2)idle time wasted due to power failure 3)idle time wasted due to machine breakdown. 4)idle time wasted due to time two,flood or storm

OVERTIME:-

The time worked over and above normal hours is overtime

NEED OF OVERTIME 1)overtime may be needed for execution of urgent

orders 2)due to break down of machinery during normal

hours 3)for utilizing perishable raw material by working

overtime  

DISADVANTAGES OF OVERTIME

a)it increases cost of production as overtime is paid ,at higher rate

b)Workers health is adversely affected

c)workers will adopt the habit of postponing the work to be done in overtime just to earn more wages

METHODS OF WAGE PAYMENT Wage means the payment made to a worker for

his work CHARACTAISTICS OF GOOD WAGE

SYSTM

1)simple

2)incentive oriented

3)flexible

4)minimum wage guaranteed

5)related to efficiency

6)quality output

7)minimum absentism

8)equality

TIME WAGE RATE SYSTEM:-

TOTAL EARNINGS = HOURS * RATE PER

WORKED HOUR

ADVANTAGES

a)simple

b)guranteed minimum wage

c)no differentiation between efficient & inefficient workers

DISADVANTAGES

1)no distinction between efficient & inefficient workers

2)more supervision expenses to stop misuse of time

3)decrease in productivity 4)discourage efficient workers  

 PIECE WAGE RATE SYSTEM:-

In this workers are paid on the basis of work done irrespective of time taken by worker.

EARNINGS = No of * rate per Units unit

 

ADVANTAGES

1)It is simple to understand & opuate

2)payment according to work done

3)increase in production

4)idle time is reduced as workers are not paid for time wasted on the job

5)reduces supervision cost

DISADVANTAGES:-

a)quality of work will suffer

b) insecurity in wages if workers not due to some reason

c)bad effect on workers health because they work more hours for more wages

d)trade union often oppose this system

 

INCENTIVE WAGE RATE SYSTEM:-

In incentive wage rate system each workers gets not only wages at normal rate but also receives bonus or premium for his efficiency .this system induces worker to work more and earn more.

Bonus means benefits to workers.

conclusionconclusion