Labor Rates, Formulation of

Labor Rates, Formulation of


the establishment of how much labor is required to produce one unit of output or to perform a given volume of work under specified organizational and technical conditions. The formulation of labor rates is one of the most important elements within the scientific organization of labor.

In the USSR, the formulation of labor rates in turn determines work assignments, service areas, and optimal methods and procedures. The amount of labor to be performed by individual workers and entire production collectives is established in this way, and the contribution made to social production is recorded and evaluated appropriately. Labor rates are also used in selecting the optimal variations of production technology and organization that will ensure minimum outlays of labor, in calculating the production capacities and labor requirements of enterprises, and in identifying reserves in order to raise labor productivity and increase production efficiency.

Labor rates are generally set by the analytic method, which provides for breaking all technological and labor processes down into their constituent parts, analyzing them, projecting the most advantageous conditions for their completion, and calculating the time needed. The analytic method is divided in turn into the analytic-calculation method and the analytic-investigation method. The analytic-calculation method involves calculation of rates on the basis of standards of work time and equipment operation. This method is used in industry to calculate technically substantiated rates for operating enterprises engaged in all types of production and for planning new enterprises. The analytic-investigation method is used to determine necessary labor outlays through investigating equipment operation schedules and labor outlays in actual operation. This method is used primarily at existing industrial enterprises under mass production conditions, as well as in other types of production where essential standards are still lacking.

Rates established by the analytic method and substantiated by scientific investigation and progressive production experience are called technically substantiated, or technical, rates. They are also substantiated from perspectives of economics, physiology, psychology, and sociology. Technically substantiated rates facilitate more efficient use of the material elements of production, including basic and auxiliary equipment and plant rigging. Research related to science and technology leads to efficient production schedules, as in metal cutting, and to equipment operation schedules that determine the basic, or technological, time required for most production processes at industrial enterprises.

Economics makes it possible to determine the best mix of different labor specializations and qualifications, including both actual and embodied labor, so that the job is completed with the minimum total expenditure of social labor. Investigations in such fields as psychophysiology and the sociology of labor constitute the basis for determining the optimal composition of the labor process and its components. These include procedures, routines, and motions; the optimal level of labor intensity; and work and rest schedules for workers that ensure high labor capacity, continuous preservation of the worker’s vital strength over a prolonged period, and opportunities for the worker’s comprehensive and harmonious development.

Labor rates formulated by analytic means involve calculation of technically substantiated rates for every element of the labor process. Rates are set for basic machine time based on key parameters of the item being produced, using performance data and standards to determine operating schedules. For example, the basic machine time for working the surface of a part on a metal-cutting lathe is determined by dividing the length to be worked, measured along the direction in which it is fed, by the amount fed in a minute.

The time allotted to basic and auxiliary manual work, to start-up and wind-up, and to servicing of the work place is calculated on the basis of time standards that are sufficient to allow for the performance of each element of the job.

Performance data, standards for equipment operation, and time standards are brought together in order to calculate combined machine-manual time.

The method of formulating labor rates depends on the nature of the job being performed and on the type of production. The most highly differentiated methods of setting rates, which involve calculation of time according to labor motions, routines, and procedures, are employed for mass production. Here the very same jobs or operations are constantly repeated, and the savings in working time resulting from an exact calculation of rates compensates for increased expenditures on establishing such rates through use of differentiated methods of calculation. Consolidated methods of setting labor rates, where rates are calculated to take into account sets of procedures, production transfers, and other related operations, are used primarily in calculating rates for series, small-series, and unit production. Service rates, management rates, and rates affecting personnel levels are established in order to determine labor rates for auxiliary workers who provide services needed for production, for engineers and technicians, and for office workers.

Existing rates for output, time, servicing, and personnel levels must be supplanted in a timely fashion by new norms when organizational and technical measures to raise labor productivity have been introduced. There should be systematic checks on existing rates and revision of outdated rates for jobs whose labor intensiveness has been reduced by a general improvement in the organization of production and labor, by an increase in the volume of production, and by improvement in the work skills of production and office workers.

The formulation of labor rates for the national economy as a whole is organized to ensure progressive rates of equal intensity at all enterprises and in all divisions of enterprises. To achieve this, centralized intersectorial and sectorial standards are developed for labor. These include uniform and model rates for output or production time, as well as standards for equipment operation, time, servicing, and personnel levels for different types and kinds of production.

The basic tasks of improving the formulation of labor rates under conditions of scientific and technological progress cover many areas. These include expanding the extent of labor rates so that norms are generally established for all production workers, engineers and technicians, and office workers engaged in both material and nonmaterial production; ensuring an advanced level and an equal intensity of labor rates; suitably differentiating rates and standards in order to resolve the full range of technical and economic calculations arising in the course of organizing labor and production; and substantiating rates from the perspective of engineering, industrial economics, and the psychophysiology of labor. Other important tasks include assuring a sufficient degree of precision in rates and standards; applying rates and standards to both current and future calculations; and adjusting rates and standards to correspond to the pace of scientific and technological progress, to changes in the organizational and technical conditions of production, and to growth in the qualifications and skills of production workers.

These tasks can be achieved through development and implementation of progressive labor standards, through automation and improvement of work aimed at calculating and revising rates within enterprises, and through strengthening both material and moral incentives for the introduction and incorporation of technically substantiated rates. Maximum results are achieved where the introduction of progressive rates goes hand in hand with the refinement of technology, labor organization, and production and with the enhancement of material and moral incentives that in effect raise the level on which labor rates are formulated.


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Shapiro, I. I. Tekhnicheskii progress i normirovanie truda. Moscow, 1968.
Osnovnye metodicheskie polozheniia po normirovaniiu truda rabochikh ν narodnom khoziaistve. Moscow, 1970.