Thursday 14 November 2019

Tom Boland: Cutting back the working week is key to job creation

Cutting back the working week is key to job creation. Picture posed. Thinkstock
Cutting back the working week is key to job creation. Picture posed. Thinkstock

Tom Boland

Recovery in Ireland is most frequently measured in terms of job creation. Enda Kenny recently promised to restore the 330,000 jobs lost since 2006 by 2020. That's over 4,000 new jobs per month for six years straight.

However, 330,000 new jobs will not restore us to 2006. The birth rate has outpaced the death rate by around 40,000 on average since 2002. Population growth has been kept in check by emigration since 2010, but that tide is turning. Without emigration, there will be over 200,000 more people in Ireland by 2020. The problems of high youth unemployment and long-term unemployment will be persistent.

Furthermore, the official rate of unemployment of 12.5pc is distorted downwards by not counting the many thousands who are involved in internships and work experience.

These in turn can inhibit real job creation by providing government-subsidised free labour power to businesses.

There is another way of looking at these figures. While less goods and services are being produced in Ireland than in 2006, it is also clear that a smaller number of people working can support an even larger population. Enough is produced for everyone to have enough.

The real problem is that employment is held by too few people. If the average amount of time people worked was reduced and more people worked fewer hours, unemployment would be reduced.

This policy has been proposed by the New Economics Foundation in London in a collection of studies entitled 'Time on our Side'. Their recommendation is that the UK move incrementally to an average working week of 30 hours. Ireland's average is 35 hours per week.

With 1.9 million employed, a reduction to an average of 30 hours per week would lead to another 300,000 jobs. This is achievable by 2020.

Over the last 150 years in industrialised countries, people have been working progressively less time per week. In 1850, the Factory Act set the working week at 60 hours. In 1926, Henry Ford was ahead of most employers in introducing an eight-hour day. After World War II, working on Saturday was phased out.

Reducing the working week balances the economy. Productivity increases lead either to growth or unemployment, as either more goods are sold or fewer workers are needed: capitalist economies are hooked on growth. Yet, real prosperity and social flourishing is created by fewer working hours.

What are the benefits of shorter working hours? Economically, more people are employed overall, cutting welfare payments.

Workers who work fewer hours are more flexible and motivated, suffering less from fatigue and illness.

Socially, people who work less have more time to care for their younger or older dependents and become engaged in their community. Even if people receive less pay – which usually doesn't always happen historically – they can scale back and lead more fulfilling lives. Environmental benefits are derived from the more sustainable lifestyles of less time-pressed workers who can take time to walk or cycle or catch public transport.

France's reduction of the official working week to 35 hours in 1998 is well known. These changes led to 350,000 extra jobs in France, and no decrease in the national productivity. A downside has been some intensification of work practices, yet the 35-hour week still has majority support.

Shorter working weeks of around 38 hours also exist in Belgium, Denmark, Norway and the Netherlands.

Employment law is changed so that employers must pay over-time after a certain number of hours, and therefore, employers begin to hire more staff. Shorter working hours can also be achieved by more gradual means. In Germany and the Netherlands, employees have a right to choose shorter hours under the same conditions, unless their employer can demonstrate a valid business reason why they should not.

In Belgium, employees have a right to take on a four-day week. In Austria, France, Luxembourg and Denmark, five weeks of annual holiday mean that there is more work to go around.

Through changing the length of the official working week and legislating for working practices that allow employees to reduce their own hours, the Government can both reduce unemployment and make Ireland a better place to live.


Irish Independent

Today's news headlines, directly to your inbox every morning.

Don't Miss