Discussion Paper 26: Does Piece Rate Pay Impact Perceived Occupational Hazards in Garment Factories?

5 Jul 2018

Piece rate pay remains a common form of compensation in developing world industries, such as ‘pay by the piece’ in the garment sector.  While the piece rate may boost productivity, it has been shown to have unintended consequences on occupational safety and health, including increased accident and injury risk.  This study uses a large survey of garment workers in 109 Vietnamese factories along with compliance data on occupational health and safety standards collected between 2010 and 2014 to explore the relationship between how workers are paid and their perceptions of occupational hazards. A random effects logit model is estimated that controls for factory and year, predicting perception of work environment hazards as a function of pay type, worker demographics, and factory characteristics.  Wage incentives such as piece rate and quota work provide the most consistently significant evidence of an effect on worker perceptions of all the variables in the model, including the factory’s own performance on occupational safety and health compliance measures.  The conditional odds of reporting a hazardous work environment concern for piece rate or quota workers ranges between 1.34 and 2.30 times that of hourly paid workers.  These results provide initial evidence to support an important role for worker perceptions in understanding the relationship between piece rate work and occupational health outcomes.

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