Wage and Effort Bargain

In year 1957, Wilheim Baldamus comes out with an article namely ‘The Relationship Between Wage and Effort' which emphasize on the relationship between wages given by the employers and the effort contributes by the employees, and so here comes the continuing develop conflict that over what Behrend(1957) called the ‘effort bargain'. ‘Effort Bargain' on what Baldamus' concept is employees hope to get back whatever rewards they should be given in exchanged of selling their labour effort to their job. However, he found out that there is disparities, inequitable, and inequalities of effort bargain among employers and employees. Finally, it comes out with the conflict of interests among one another. This can be seen in the sentence ‘As wages are costs to the firm, and the deprivations inherent in effort mean ‘cost' to the employee, the interests of management and wage earner are diametrically opposed.' (Baldamus 1961)

Baldamus mentioned about the time and motion study on wage-effort bargain. The time study arise is to measure the exact time ‘required' by a given worker for a given operation (Baldamus 1957) . Baldamus quoted from Lowry Maynard and Stegemerten state that the aim of time study is ‘to determine by scientific measurement the number of standard hours in which an average man can do the job'. Employers set fair time standard for employees to work with their average effort to have average performance and hope that with this fair time it will have increased profit and earning for the firm with their increasing effort from the workers. But the problem is, the workers will be only exerting just the average or fair efforts as well as they hold back their effort because they might fell doubtful about the fairness of the time-study man. Finally, the employers will claim that the workers are not putting in their effort on going their job, on the other hand, the workers will deny that they are not doing well.

Based on Baldamus' article, piece rate in simple word means how many pieces of production a worker can produce on certain time that is set by the employers. To determine the amount of the effort given by a workers whether is it too much, just right, or too little, here comes a conception of ‘loose' and ‘tight' piece rates. What does it mean by ‘loose' rates? This happen when the workers' effort being overestimated by the time-study man. Time-study man may think that the worker can give a higher effort to the firm, but actually the wage given to the worker is too generous in the sense that actually the worker does not reach the level of effort which the firm expected from him or her. In other words, the firm find out that they are having ‘loss' on their cost to such worker, but such worker are having a earning on the wage given. While for the ‘tight' rates is the mean of another way. The workers' effort