Item No. 3.

The railway benefits directly under the Premium system by reason of the fifty-fifty division of time saved. The cost of each operation decreases as greater proficiency is developed by the operator, and the bonus money earnings of the operator do not go up at such a rapid rate as under Piecework. This permits of more liberal rate setting and it provides for a greater margin of error in rates (for rate-setters too are human).

An example will make the position more clear. Suppose the job is turning tires, the actual working time to turn one pair being 60 minutes.

The “Time allowed” under Premium would be 60 minutes plus 40 per cent. equals 84 minutes.

The “Time allowed” under Piecework (that is, modern Piecework systems where guessing is not done) would be 60 plus 20 per cent. equals 72 minutes.

Consider an eight hour day's production.

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The operator would receive as a bonus the following number of minutes pay at his own rate, in addition to his day rate wages.

The advantages of Premium are seen in the above. The operator earns more bonus for less output than under piecework. This gives more incentive and makes it possible for a greater range of operators to gain a bonus. Since eight per day represents the basic rate of an average good man, it is seen that at that point the actual bonus under either system is the same, the Railway does not take any half of it as is usually misconstrued. Lastly the earnings of the super speed operator are not so excessive as to necessitate rate cuttings at the expense of the average man.

Note:—Work out for yourself the above example, just to make sure you understand it. I will send copies of the calculation to any that would like them.