Piece work or piecework describes types of employment in which a worker is paid a fixed "piece rate" for each unit produced or action performed. Piece work is also a form of performance-related pay (PRP) and is the oldest form of performance pay.
In a manufacturing setting, the output of piece work can be measured by the number of physical items (pieces) produced, such as when a garment worker is paid per operational step completed, regardless of the time required. If quality is equal, piece rate rewards the more productive worker and offers less to those less productive. In this regard, it is a good example of free market economics. If everyone is paid the same regardless of output, some contend there is little motivation to produce at a high level beyond the natural work ethic of that individual. An advantage for the company is that this method of payment helps to guarantee the costs per unit produced, which is useful for planning and forecasting purposes.
In a service setting, the output of piece work can be measured by the number of operations completed, as when a telemarketer is paid by the number of calls made or completed, regardless of the outcome of the calls (pay for only certain positive outcomes is more likely to be called a sales commission or incentive pay). Crowdsourcing systems such as Mechanical Turk involve minute information-processing tasks (such as identifying photos or recognizing signatures) for which workers are compensated on a per-task basis.
As a term and as a common form of labor, 'piece work' had its origins in the guild system of work during the Commercial Revolution and before the Industrial Revolution. Since the phrase 'piece work' first appears in writing around the year 1549, it is likely that at about this time, the master craftsmen of the guild system began to assign their apprentices work on pieces which could be performed at home, rather than within the master's workshop. In the English system of manufacturing, workers mass-produced parts from a fixed design as part of a division of labor, but did not have the advantage of machine tools or metalworking jigs. Simply counting the number of pieces produced by a worker was likely easier than accounting for that worker's time, as would have been required for the computation of an hourly wage.
Piece work took on new importance with the advent of machine tools, such as the machine lathe in 1751. Machine tools made possible the American system of manufacturing (attributed to Eli Whitney) in 1799 in which workers could truly make just a single part--but make many copies of it--for later assembly by others. The reality of the earlier English System had been that handcrafted pieces rarely fit together on the first try, and a single artisan was ultimately required to rework all parts of a finished good. By the early 1800s, the accuracy of machine tools meant that piecework parts were produced fully ready for final assembly.
In the mid 1800s, the practice of distributing garment assembly among lower-skilled and lower-paid workers came to be known in Britain as the sweating system and arose at about the same time that a practical (foot-powered) sewing machine, was developed. Factories that collected sweating system workers at a single location, working at individual machines, and being paid piece rates became pejoratively known as sweatshops.
Today, piece work and sweatshops remain closely linked conceptually, even though each has continued to develop separately. Factories today may receive the label "sweatshop" more because they have the long hours and poor working conditions, even if they pay an hourly or daily wage instead of a piece rate. Meanwhile, piece work in a service economy, such as being a telemarketer paid per-call, may actually afford a work environment which compares favorably to other available work. Piece work was adopted in some English farming communities to dramatically improve living standards during the economic depression of the mid-1930s.