“On the side of the working population there can be no question respecting the desirability of fewer hours, from every standpoint. They gain not only in health, but also in intelligence, morality, temperance, and preparation for citizenship.... Lessening of hours leaves more opportunity and more vigor for the betterment of character, the improvement of the home, and for studying the problems of citizenship. For these reasons the short workday for working people brings an advantage to the entire community....
“In all cases where reductions have been brought about there have been strenuous objections and alarming predictions, but after a very brief period of trial these objections have disappeared, except where lack of uniformity remains a ground of complaint; and employer and employee, with this exception, alike have agreed upon the advantages of the change.” -- from the 1902 final report of the Industrial Commission of the US Congress (John R. Commons, researcher).
The Work Less Party is a registered political party in British Columbia. In the May 17, 2005 election we ran candidates in 11 ridings who received a total of 1,642 votes.
The Work Less Party would like to see a substantial reduction in the standard hours of work. A reduction to a 32-hour 4-day week, along with more effective regulation of overtime, would only bring us back into line with the historical decline in the hours of work that prevailed in Europe and North America from the middle of the 19th century to the middle of the 20th.
Such a reduction would address the issue of precarious employment by reducing the glut of hours in the labour supply. It would address the issue of work-family balance by generating more family-friendly job schedules and it would address the issue of productivity and competitiveness because long hours of work and unstable employment are drains on productivity.
A workweek more attuned to the workplace and workforce of the 21st century – that is a much shorter workweek – would alleviate the need for minute tinkering with regulations and introduce a degree of self-enforcement because it would help to re-establish balance between the power of employers and the power of the employees. We also believe that a substantial reduction in the hours of work is the only equitable way to move toward reduced consumption in the wealthy countries, such as Canada, so that we can reduce our ecological footprint and move toward social, economic and environmental sustainability.
Although we would very much like to see a substantial reduction in the standard hours of work and although we believe such a reduction is urgent socially, economically and environmentally, we are not asking the commission to make such a recommendation. Why not?
Because substantive and moderate recommendations were made eleven years ago by the Advisory Group on Working Time and the Distribution of Work but they were not adopted. Substantive and very reasonable recommendations regarding the hours of work were made by the Collective Reflections Commission and those recommendations too went to that shelf where reports go to gather dust.
The workplace has changed, the workforce has changed, many recommendations have been made but few have been adopted. Meanwhile, a generation has grown to maturity for whom things like precarious employment, downsizing, outsourcing, regularly scheduled overtime, just-in-time production and dual income families are not novelties or aberrations but seem to be “the way it has always been.”
We would rather see moderate, reasonable recommendations from a decade ago adopted than see bolder recommendations shelved alongside the earlier ones. It is especially important to reflect on why those earlier recommendations have not been adopted.
Thirteen of the 24 recommendations made by the Advisory Group on Working Time and the Distribution of Work are pertinent to Part III of the Labor Code. As far as I am aware, one has been implemented. The Advisory Group’s recommendations touched on worktime innovations, the standard workweek, overtime, annual hours and time-off in lieu, contingent work force, part-time workers, retirement, family leave, education and training leaves and UI (now EI) worksharing. A list of the recommendations is included in Appendix A, with the applicable recommendations in bold. The spirit of those recommendations is summarized by the first: “The Advisory Group endorses a new public policy priority that emphasizes redistribution and reduction of working time.”
But, it is important to recognize that no matter how well-intended policies and regulations may be, they cannot be effective if the unintended side-effects of other government policies undermine them. This is why we want to call the Commission’s attention particularly to recommendation number 3 of the Collective Reflections on the Changing Workplace: “Public policy should not create artificial incentives for a longer work week or for creating part-time jobs at the expense of full-time ones.”
“Currently, public policy sometimes creates artificial incentives for employers to hire part-time instead of full-time workers, and to increase significantly the weekly number of hours worked by existing employees.”
In his “personal reflections” Commissioner Lars Osberg elaborated on the reasoning behind that recommendation:
“The design of payroll tax-based programs such as Employment Insurance and the Canada Pension Plan now encourages firms, when they need more labour, to increase overtime hours rather than hire new employees. Employer premiums for EI are payable only until workers reach maximum insurable earnings, and employer premiums for CPP are payable only until maximum yearly pensionable earnings are reached. Above those thresholds, each additional hour of work costs the employer nothing in payroll taxation. Payroll taxes, like employer-paid fringe benefits (e.g., supplementary health insurance) are then a lump-sum cost per employee, which can be spread over more hours of employment, hence the benefit to the employer of a longer work-week for covered employees. Government also implicitly encourages businesses to pay part of employee compensation in the form of such fringe benefits by exempting their value from income taxation.
“On both equity and efficiency grounds, it would be desirable to level the playing field. We do not allow, much less encourage, employers to pay different compensation packages to individuals of different ages, and we should not create government policy incentives that encourage different packages for full-time and part-time workers.”
As the 1902 Industrial Commission noted, “in all cases where reductions have been brought about there have been strenuous objections and alarming predictions...” And this is why we believe it is so important to reflect on why earlier recommendations for change have not been adopted. There is a superstition common to business lobbies and mainstream economists that fixing the overwork and underemployment dilemmas would harm competitiveness -- that it would raise costs and lower productivity. This belief is based on nothing more than its own endless repetition (Walker 2000 and 2005).
According to Canadian Chamber of Commerce, the unemployment rate in Canada, at 6.8% in July 2005, is now “historically, very low for the Canadian economy.” That is very much a matter of perception and interpretation. Of course, unemployment rates always seem much lower to those who don’t have to look for work. But more fundamentally, the unemployment rate simply doesn’t mean today what it meant historically. People whose employment is precarious are employed. People working part-time because they can’t find full-time work are employed. People forced to work more hours than they would like to are employed.
A Rockefeller-Ford Foundation-funded project involving a team of labour market experts from nine countries (including Andrew Sharpe, executive director of the Canadian Centre for the Study of Living Standards), “Understanding Unemployment and Working Time: A Cross-National Comparative Study” found that “the unemployment rate is no longer an adequate measure of labor market capacity, economic performance, or social wellbeing.” The most important recommendation from that study was that “more attention needed to be paid to hours in the measurement of both labour market capacity and labour market performance.” (Bluestone and Sharpe 2004)
In a letter to the Commission, Bill Gault, an airline industry employee in Calgary would like to see the 48 hour limit removed because “sometimes 48 hours is not enough to make ends meet.” Let’s get real. If you can’t make ends meet on 48 hours pay, you’re going to have an even tougher time getting by on 52 or 56. Your living expenses, work expenses and taxes will all go up and your hourly productivity will go down. It is possible that even your total output will also decline and thus eventually so should your hourly wage and total income.
Beyond a definite measurable point, you can’t “make ends meet” by working more hours. And that is not merely the opinion of the Work Less Party. It is the view of the neoclassical economic theory of the hours of labour as explained by Sir Sydney J. Chapman at his presidential address to the Section on Economic Science and Statistics of the British Association for the Advancement of Science delivered in Winnipeg in 1909.
The Canadian Labour Congress in its submission cites retired ILO Werner Sengenberger’s argument that worker productivity depends on decent work and contrast that with what they call a “profoundly misleading” neoclassical view of the labour market. It needs to be stressed that the mainstream ‘neoclassical’ view that we hear from contemporary economists is not only profoundly misleading but it ignores and directly contradicts the theoretical foundations, with regard to the hours of work, of its own tradition.
We humbly submit that the “strenuous objections and alarming predictions” heard against reducing the standard hours of work are based on an atavistic retreat to Victorian-era prejudices and a willful ignorance, by many economists themselves, of the economics that refuted those prejudices a century ago.
Appendix A: Recommendations of the Advisory Group on Working Time and the Distribution of Work, 1994
General
1. The Advisory Group endorses a new public policy priority that emphasizes redistribution and reduction of working time.
2. The Advisory Group urges employers, trade unions, and employees to place more emphasis on working time issues and their implications in collective bargaining and workplace decision making.
3. The Advisory Group recommends that the Minister of Human Resources Development initiate energetic and broadly-based public discussions on the Report. We urge the provincial ministers of labour to participate in these post-report consultations, as part of a national dialogue, and/or that they undertake their own consultations.
Worktime Innovations
4. The Advisory Group calls on governments, as the largest employers in Canada, and on their collective bargaining agents to review the recommendations of this Report and to support innovative (workplace) practices to facilitate the reduction, reorganization, and redistribution of work in the public service.
5. The Advisory Group urges the federal and provincial ministers of labour to give priority to the issues of worktime in their deliberations and to examine the policies in their jurisdictions which would support new arrangements in the public and private sectors with the potential for additional job creation.
The Standard Workweek
6. The Advisory Group notes that marked disparities exist in the legislated standard workweek across Canada. We recommend that the legislated standard workweek be no longer than 40 hours per week in any jurisdiction.
7. The Advisory Group recommends that federal and provincial governments periodically review the legislated standard workweek to ensure that the standard moves with the normal full-time workweek in their jurisdiction.
Overtime
8. The Advisory Group recommends that employees be given the right to refuse overtime work after the legislated standard workweek of 40 hours and that this right be incorporated into employment standards legislation.
9. The Advisory Group recommends that employers and employees utilize time off in lieu of overtime pay after the standard workweek.
Annual Hours and Time-off in Lieu
10. The Advisory Group recommends that the maximum amount of overtime in excess of regular working hours for which compensation can be paid be set at 100 hours annually. Overtime in excess of the 100 hours should only be compensated on the basis of time off in lieu of overtime, at the overtime rate.
11. The Advisory Group recommends that the hours of work coverage under employment standards legislation be broadened to include salaried employees and other full-time workers who may now be excluded. Similar annual limits on overtime and the requirement for time off in lieu of overtime pay beyond 100 hours would apply to this group.
Contingent Work Force
12. The Advisory Group recommends that employment standards be vigorously enforced, especially for part-time workers and for those outside the normal workplace environment. Special attention should be paid to non-standard workers to ensure that they are fully covered and protected under employment standards, have access to collective bargaining, and receive at least the minimum hourly wage and other workplace-related social benefits.
13. The Advisory Group recommends that a registry be created in all jurisdictions to cover employees who work at home. Employers would be obliged to provide information on hours of work and pay for their home-based employees. It should include a mechanism to enable employees to register and to verify the accuracy of the information about their hours of work and their pay.
Part-time Workers
14. The Advisory Group recommends that employers be required to provide pro-rated benefits to regularly employed, part-time employees.
Retirement
15. The Advisory Group supports wider adoption of the practice of phased-in retirement, under which older employees are encouraged to work reduced regular hours or take leaves of absence as a transition to retirement.
16. The Advisory Group recognizes that a major obstacle to phased-in retirement could be the reduction of future public and private pension benefits. We recommend that governments, employers, unions, and employees consider changes and their implications to public and private pension plans, arrangements, and regulations, to ensure that phased-in retirement does not substantially reduce future pension benefits.
Family Leave
17. The Advisory Group recommends that employment standards in all jurisdictions provide a right to take an unpaid leave of absence from work after the birth or the adoption of a child at least equal to the period of entitlement to Unemployment Insurance under maternity and parental benefits (15 weeks maternity benefits and the 10 weeks of parental benefits payable to the mother of father). Serious consideration should be given to the general adoption of the Quebec standard of 34 weeks of leave.
18. The Advisory Group recommends that Canadians be entitled to five days of unpaid family leave per year, the current standard in Quebec. These leaves would be linked to the care and health of immediate family members.
Education and Training Leaves
19. The Advisory Group recommends the increased adoption of paid education and training leave plans through the joint agreement of employers and employees and unions.
20. The Advisory Group recommends that a basic entitlement to unpaid education and training leaves be entrenched in provincial and federal standards in order to expand opportunities for learning. The ability to gain access to this entitlement should be linked to the length of service with a company or organization.
21. The Advisory Group urges the federal government to support greater use of education leaves by considering changes to the tax system such as income averaging.
UI Worksharing
22. The Advisory Group recommends the continuation of the UI worksharing program for reducing short-term layoffs. However, the applications process should be reviewed to ensure that it is more accessible, particularly to small business.
Post-Report Processes
23. The Advisory Group recommends that the responsibilities of existing organizations be expanded to promote and report on worktime redistribution and flexible work arrangements over the longer term. It recommends that the Canadian Labour Market and Productivity Centre (CLMPC) focus on ongoing consultations between business and labour, while the Bureau of Labour Information (BLI) focus on disseminating information on changing worktime practices.
Information Needs
24. So that all Canadians may better understand the changing workplace, the Advisory Group recommends that Statistics Canada monitor these trends, and specifically: a) conduct periodic surveys of worktime preferences and practices of both employers and employees; b) provide more data on the non-standard workforce.
Appendix B: From the Report of the Advisory Committee on the Changing Workplace, 1997
CHAPTER 9. CONCLUSIONS AND RECOMMENDATIONS, (P. 196):
3. Public policy should not create artificial incentives for a longer work week or for creating part-time jobs at the expense of full-time ones.
Currently, public policy sometimes creates artificial incentives for employers to hire part-time instead of full-time workers, and to increase significantly the weekly number of hours worked by existing employees. Requiring part-time and contract workers to be paid equal hourly wages to comparable full-time workers, and to be given pro-rated benefits or equivalent cash compensation would be one way of lessening incentives to employers to convert full-time jobs to part-time jobs. Threshold firm size limits for providing these protections should be avoided since they create an artificial incentive for firms to sub-contract work. This recommendation would require a government-wide review, in consultation with industry and labour, to remove tax incentives and other incentives (e.g., in EI) for high overtime hours, for converting full-time jobs to part-time, and for hiring more part-time staff rather than offering additional hours to existing part-time staff.
CHAPTER 7. LARS OSBERG (pp. 155-159):
A LEVEL PLAYING FIELD IN WORKING HOURS
A major issue identified by many of the contributions to the Advisory Committee is the increasing inequality of working hours in Canada. Although the overall average of hours worked by all employees has not changed much in recent years, an increasing proportion of employees are working more than 50 hours per week, and an increasing fraction are also working less than 20 hours. It has often been argued that public policy plays a major role in creating incentives that encourage firms to work some full-time employees extra-long hours, and that simultaneously public policy creates incentives to maintaining a class of part-time workers with relatively few fringe benefits.
The design of payroll tax-based programs such as Employment Insurance and the Canada Pension Plan now encourages firms, when they need more labour, to increase overtime hours rather than hire new employees. Employer premiums for EI are payable only until workers reach maximum insurable earnings, and employer premiums for CPP are payable only until maximum yearly pensionable earnings are reached. Above those thresholds, each additional hour of work costs the employer nothing in payroll taxation. Payroll taxes, like employer-paid fringe benefits (e.g., supplementary health insurance) are then a lump-sum cost per employee, which can be spread over more hours of employment, hence the benefit to the employer of a longer work-week for covered employees. Government also implicitly encourages businesses to pay part of employee compensation in the form of such fringe benefits by exempting their value from income taxation.
On both equity and efficiency grounds, it would be desirable to level the playing field. We do not allow, much less encourage, employers to pay different compensation packages to individuals of different ages, and we should not create government policy incentives that encourage different packages for full-time and part-time workers.
Two aspects are important - payroll taxation (CPP and EI) and employer-paid fringe benefits. A level playing field in fringe benefits would be more likely to occur if there were no tax subsidies to employee benefits packages, i.e., if the federal government were to fully tax all employer-paid fringe benefits as taxable income in the hands of employees. However, since this would have large impacts on pension plans, a less radical policy would be either to (a) tax only some fringe benefits as income (e.g., supplementary medical benefits) or (b) exempt from taxation as personal income those fringe benefits that are now exempt from taxation as personal income (chiefly registered pension plans and supplementary health insurance) and whose coverage is automatically extended on a pro-rated basis to all employees at firms' worksites. The basic objective is to ensure that employers would not have a tax-subsidized incentive for concentrating employment hours on existing employees. (It might be noted that any such reform would produce increased income tax revenues; but to avoid accusations of a "tax grab," such revenues could be refunded through a cut in the base rate of income tax - and many public finance economists have argued for years for a tax system with a broader base and a lower rate.) On the payroll tax side, the bias to concentrating additional employment hours on workers who have already reached the ceiling on payroll taxes would be much reduced if those ceilings were increased. Most European countries insure a much more substantial fraction of earnings than Employment Insurance now does (indeed, in the EI reforms, maximum insurable earnings were actually cut). In today's climate of economic insecurity, it is perverse to decrease the extent to which individuals can insure their incomes against hazards.
A 50% increase in maximum insurable earnings for Employment Insurance would reduce inequality in the distribution of total income and would reduce the insecurity that the middle class now feels. Because the probability of unemployment is lower for better-paid employees, increased premium income would outweigh the increase in EI benefits, and the net effect of increasing maximum insurable earnings would be to decrease the federal deficit. However, since the EI fund is already running a substantial surplus, accusations of a "tax grab" would be avoided if the increased net premium income from increasing maximum insurable earnings were refunded in the form of lower EI premiums - which would have the added effect of decreasing the payroll tax impediment to job creation.
A similar increase of 50% in yearly maximum pensionable earnings under the Canada Pension Plan would also have positive revenue implications, but in the CPP case, it could be argued that the increased premium income should be used to increase the funding of the CPP. Since a great deal of anxiety has been recently created concerning the funding of the CPP, greater public confidence in its solvency is worth achieving. More fundamentally, however, the CPP as it is now designed replaces relatively little of most people's earnings in retirement, compared to most other public pension plans (e.g., US Social Security). As things stand in Canada, private pensions cover less than half the retired population, in part because benefits are frequently lost when workers change jobs before vesting. Since the work world is moving in the direction of shorter-term job attachments, the portability of the CPP is an important reason why it should play an expanding role in maintaining the old-age security of Canadians.
Such changes in financial incentives would only nudge employers somewhat away from the current practice of allocating excessive overtime to existing employees, while often denying fringe benefits to part-timers. Scheduling issues, the costs of training and the uncertainties associated with new employees are all important factors influencing the distribution of working hours within firms. However, the changes urged above: (a) would not increase the federal deficit, (b)would reduce inequality in the distribution of working hours, (c) would increase the effective "social insurance coverage" that EI and CPP now provides to members of the labour force, and (d) would not impose on employers any additional regulatory burden. As many of the contributors to the Advisory Committee's Web site have noted, there is something irrational about a society organized in such a way that many people feel over-worked and stressed out, while many others are underemployed or unemployed. There are an increasing number of Canadians working long hours, in a family context where both parents typically work outside the home. Although it was common a century ago for employees to work ten-hour days for six days each week, the total supply of the family's time to the paid labour market may well have been less than that of two parents who now both try to keep full-time jobs. The design of jobs has, in many instances, been slow to adapt to the changing family context of workers and the enduring needs of families.
When the issue of "Working Time and the Distribution of Work" was examined by an Advisory Committee to the Minister of Human Resources Development in December 1994, it was recognized that although there might be many benefits to a four-day work week, it would be a very bad idea to try to impose such a schedule on a diverse labour market. That Advisory Committee opted instead to urge business, government and labour to place more emphasis on working-time issues in their negotiations and workplace decision-making.
However, it might now be desirable for the federal government to take a more active role - indeed to act as a role model, and to demonstrate in its own operations the feasibility of a four-day work week. By combining a four-day work week with increased flexibility in the timing of those working hours, the federal government might well be able to demonstrate that it can provide better public service, and at the same time enable its employees to pursue a better quality of life. Since the work-week norm is as much a social institution of shared expectations as anything else, practical demonstration of the feasibility of a four-day work week might well help to initiate a broader social change - or, at the least, to provide a broader menu of working-time options in the labour market.
Appendix C: Technical footnote to S. J. Chapman's 1909 address on the "Hours of Labour" (graphs added by Tom Walker, 1999).