The shorter working week can work

March 17, 2017

17 March 2017

By Emma Dawson

In just two weeks’ time, on 1 April, we will enter our 104th quarter of economic growth without recession, and officially claim the record for the longest period of economic expansion in history. Australians like breaking records. We’re usually pretty smug when we beat the world at anything. But this particular record is unlikely to generate much popular excitement, and with good reason – most of us aren’t feeling the benefits.

To explain why, we need to take a look at another recent record: last year’s wages price index recorded an annual rise of just 1.9%, the smallest in the index’s 20-year history. Let’s consider that wages in the private sector – that great engine of economic growth – have risen just 0.5% in almost three years. And then let’s recognise that the unemployment rate has been stuck at 5.7% (around 750,000 active job seekers) for nine months.

According to the 2015 Household, Income and Labour Dynamics in Australia (HILDA) Survey, around 16% of people who are currently employed would like to work more hours in a week – that’s close to 1.5 million people who are underemployed. At the same time, those of us with jobs are working longer hours, both in the office and when we get home, still tethered to our smartphones and laptops. The HILDA Survey also found that around 26% of Australian workers would prefer to work fewer hours.

Debate has raged in the week since International Women’s Day about the gender pay gap and the fact that women are still too often forced to choose between work and motherhood in a workplace structure that doesn’t accommodate the needs of modern families with two working parents. This was of course brought into stark relief by Kate Ellis’ decision to retire from federal politics.

It’s good to see some of our political leaders starting to think about some policies that might make a change to all this. While Richard Di Natale on Wednesday was at pains to emphasise that the Greens aren’t “suggesting any specific model”, his call for a national conversation about a shorter working week is a good start. A shift to a standard 30-hour working week could herald a range of benefits, particularly for the increasing number of families with two parents working to pay the skyrocketing mortgage repayments on a home within a reasonable commute of their jobs.

Both parents could work four days a week, giving each of them an extra day to take care of all the unpaid labour that currently falls disproportionately on the shoulders of women, leading directly to a lifetime pay gap that sees women earn more than a million dollars less in lifetime earnings. Alternatively, parents with school-aged kids could work five six-hour days each, ensuring that at least one parent was available for school drop-off and pick-up, and to attend school events and after-school activities.

Predictably, naysayers from big business and the financial sector are already out in force. Before Di Natale even took to the podium at the National Press Club, Matt Sherwood, head of investment strategy at Perpetual Investments, was scoffing at the idea on the ABC’s World Today. “Obviously”, Sherwood said, the idea would “massively impact employment … lead to much lower income and … a much smaller economy in general”.

It’s not clear what “massive impact” a shorter working week would have on employment other than making additional hours available to people seeking more work and people trying to enter or re-enter the workforce. Sherwood’s other claims only bear up if one assumes, as he said, that “reducing [people’s] working week by a fifth would impact their income by the same amount”. This is the assumption that needs to be challenged in this debate. Making the shift to a 30-hour working week shouldn’t see a drop in earnings for workers, or, necessarily, a decline in productivity.

When workers fought for and won the eight-hour working day in Victoria more than 150 years ago, they did so on the basis that wages would remain the same. In 1914, the Ford Motor Company in the US adopted the eight-hour day while simultaneously doubling wages – and was rewarded with increased productivity.

The Swedish experiment that Di Natale referred to on Wednesday found that moving to a six-hour day saw workers’ productivity increase, largely due to reduced stress and work-related illness, and increased energy and attention levels.

After 26 years of uninterrupted economic growth, no one can argue that Australia’s economy isn’t delivering for business owners and shareholders. Productivity is up, profits are strong, growth is apparently unstoppable. But something is wrong in the engine rooms of our economy. Our employment and workplace structures aren’t meeting the needs of the people who work in them. The economy isn’t working for the people; the people are working for the economy. The output looks good, but the inputs are breaking us.

We can either take steps to change that – to shift the balance back in favour of the people doing the work – or we can wait for the whole thing to implode. That’s already happening in the US and Europe, and, as evidenced by last weekend’s WA election, Australians are increasingly angry about not getting their share of the spoils.

As the talk of our record-breaking economic prosperity continues, it’s time to begin a new conversation. Australians need to decide what the “good life” really means in one of the world’s wealthiest nations.

This article first appeared in The Monthly Blog, 17 March 2017