You can either pay someone $20 an hour and give them a sense of responsibility, autonomy, & pride, or you can pay them $10 an hour and just coerce them to do the job.

Which do we reward?

Based on the proportion of businesses that exist utilizing the latter, it indicates we are rewarding the latter. Most people are very price sensitive.

The cost of the tracking plus the cost of employee moral disappearing won't give you that competitive advantage plus the other extras youhave to do to maintain that rate (do you have a logbook of the times you had the unit serviced, semi-yearly maintance is required at your cost)

It could (and does in my experience) as the cost of tracking goes down to practically nothing. If the employee has options to work elsewhere, then the employee morale might enter into the equation. But as far as I can see, even doctors and pharmacists are tracked nowadays. Drivers are tracked more than ever, dash cams are becoming regular. Call center employees have been tracked for a long time now. Hotel employees have iPads where they go through their checklist.

And if you're indoors in a public business setting, there's a near certainty you're on camera for any big business. Of course, there's a difference in tracking minute by minute movement, but my point is that we went from no tracking to quite a bit of tracking already, and I don't see any reason why this won't become widespread either (absent laws preventing it).

It might not be a competitive advantage to disrespect your employees.

Unfortunately, there are large swaths of jobs where the employees don't have much choice, so there is no competitive disadvantage either.