A Four-Day Week with No Pay Cut: For a Workers’ Answer to Unemployment

The most optimistic assessment by the Reserve Bank is that it will take a “few years” to reverse “much” (i.e. not all) of the increase in unemployment from the Covid-19 lockdown. The wages vs jobs trade-off debate is back with a vengeance.

Image: The Conversation

Unionists are arguing that keeping up incomes will stimulate demand and economic growth, while employer voices argue that they cannot afford a 4% rise in the minimum wage, and many will cut employment or go out of business.

The system is lose-lose for workers. Our employment has to be profitable, and capital has not “invested” in full employment for over 4 decades. Previous periods of sharp rises in unemployment have resulted in union concessions, retarded wage growth plus loss of job security and conditions.

When unions agreed to a series of Prices and Incomes Accords with Labor governments in the 1980s and 1990s, they accepted the argument that wages had to be traded off in order to save jobs. The consequence of those union concessions was not a more even share of jobs and incomes. What actually followed was persistent unemployment, under-employment side by side with overwork, long hours, and two-income households juggling work-life balance – plus inequality, poverty and punishment of the unemployed.

We’re dealing here with a system of capitalism. It allocates (or doesn’t allocate) labour according to private employers’ calculations of return on investment plus government agency calculations of best conditions for employers to decide to invest. It is not a system of allocating labour to where work needs to be done in order to take care of people, or the planet.

Workers need to invert the economy, so that we start with what people need to consume, and how to share the working time fairly among the people able to produce it, rather than starting from how to make investment profitable, with capital choosing who gets an income from working to make their employer a profit.

The work that needs to be done, in order to care and provide for the population, could be shared around more equally, with a shorter standard working week. This would mean an increase in the hourly rate of pay to maintain incomes.

Incomes would be more secure with a shorter and standardised work week (with worker-driven flexibility via leave entitlements) and limited use of part-time and casual employment.

A four day 32 hour week with no loss of pay would increase the minimum hourly rate of pay from $19.49 to $23.15, and be the equivalent of an 18.5% pay rise for part-time workers.

Productivity gains shared as time

Time, our time, our free time is something that the union movement used to fight for, but there has been no reduction in the standard working week of 38 hours for almost 4 decades.

Unions won shorter hours, starting with the 48 hour week in Melbourne in 1856, then a 44 hour week in 1939, 40 hour week in 1948, and 38 hour week from 1981.

But since about 1980 there has been a slight increase in the actual weekly work hours of full-time workers.

Image: Our World in Data

There has been no reduction in hours since the “family wage” concept of the minimum wage faded away between 1975-1995. Married women could first claim the dole in 1995. With that, the growth in women’s labour force participation and two income households means households work even more hours. This is very difficult to find statistics for, as labour time is counted for individuals, not households.

Productivity gains have gone to capital

Productivity increases have been the basis for shorter working hours, but these increases have gone to capital, not labour income or time-share.  Several assessments of labour share of GDP in recent times confirm this.

Image: Centre for Future Work 1975 – 2018

“Between 2000 and 2012, productivity rose by an average 1.3% per year, while real hourly labour income rose by only 0.6% per year on average. In 2000, the labour share was 65.6% – this had fallen to 59.7% by 2012. The labour share recorded in 2011 was the lowest for at least fifty years” (ACTU 2013 Shrinking slice of the pie).

Image: Business Insider 1990 – 2019

Even if labour could increase its share of productivity by decreasing working hours, and/or increasing incomes, finance and housing remain outstanding channels through which household time and incomes have been more intensely squeezed in recent decades. “The long-run increase in the capital share largely reflects higher returns accruing to owners of housing (primarily rents imputed to home owners, particularly before the 1990s) and financial institutions (since financial deregulation in the 1980s)” (RBA 2019). This flags a warning, which suggests that plans by workers and their unions to fight for an increased share of productivity, will also have to place demands on the inter-linked housing and financial systems.

A standard working week versus work insecurity

Work insecurity became a much wider problem in the 1980s and 1990s. There was an unemployment spike in each decade. Workers and their unions feared unemployment, and employers won industrial reforms to extend flexible employment practices, including casual employment.

1986 – The Australian Conciliation and Arbitration Commission ruled “claims for reduction in standard weekly hours below 38, even with full cost offsets, should not be allowed” (Australian Conciliation and Arbitration Commission 1986. National wage case)

1986 – 1996 – Unions agreed to “structural efficiency principles” in wage reviews, under which conditions were lost. The proportion of part-time (including casual) employment grew at the fastest rate ever in this decade (Borland, J. 2017. Part-time employment part 1 Labour market snapshot #37).

1997 – Howard Government workplace reforms excluded clauses from awards and disallowed EBAs from specifying proportions of an enterprise workforce to be employed in categories such as casual, full time and part time (Australian Industrial Relations Commission 1997 December. Award simplification decision).

Benefits of a shorter standard working week

Workers have more control of our lives and work

Standardisation reduces insecurity. We lead Just in Time lives – as work has become more insecure, and incomes more precarious, and as employers have more control over hours, irregular hours, casual employment, and the gig economy.

Unity and inclusion. All workers can be benefit mutually, those in insecure employment, in full-time work with long hours, struggling with work-life balance, in any sector of employment, and without work at all.

Gender equality in unpaid and paid work. A standard working week that is shorter would make it easier for women and men to more equally share unpaid caring work. Employers in the 1980s and 1990s took advantage of women’s need for shorter hours of work, by undermining the standard working week and kicking off an explosion in female-dominated, low-paid casual work.

Unemployment damages people. Of the many traumatic consequences of unemployment is suicide risk. “Modelling from the University of Sydney’s Brain and Mind Centre has forecast the financial and psychological toll could result in an extra 750 to 1,500 suicides a year, with fears Indigenous and multicultural communities are among those at greatest risk.”

Climate action. Less hours of work could reduce greenhouse gas emissions. The increased availability of employment across industries would enable workers in emissions intense industries to find incomes elsewhere.

Free time is freedom.

Let’s get radical – while so many people care

Previously unthinkable policies have been adopted in response to COVID-19, including the (temporary) doubling of unemployment benefits. Sudden change is possible. Gradual change might never happen.

Image: AUWU Newstart drops further below two measures of poverty line

The immediate priority for meeting the needs of unemployed people has to be to defend the new JobSeeker rate of unemployment benefit, and prevent reversion to Newstart, as well as stopping mutual obligation, cashless welfare and robodebt.

This presents a simultaneous opportunity to win support for employment solutions aimed directly at meeting people’s needs, while more people than ever are feeling more insecure about being able to pay their bills and keep their homes. The massive rise in unemployment and underemployment makes this a critical time for at least making the case (which of course the bosses will say they can’t afford) for a shorter standard working week with no loss of pay.

We can and should make the change back impossible – because now there are a LOT MORE people who will care about unemployment.

Employers are not wasting the crisis

What is actually happening during the lockdown is that employers are demanding, and getting more control over allocating work, and consequently cutting people’s incomes. Employers have won changes to awards (clerks, restaurant, legal services) so that they can cut pay by cutting hours of work, direct employees to take annual leave on short notice, and put up alterations to Enterprise Agreements with only one days notice, instead of seven. There is a public sector pay freeze. The Australian Mines and Metals Association advocates abolishing all awards and agreements for 6 months, and other employer groups want an overhaul of the Fair Work Act so that they can increase labour productivity (Alison Pennington, Centre for Future Work).

Sally McManus is critical of these attacks on incomes and conditions, but the ACTU is not putting the case for unions to organise on the job to stop employer attacks, nor arguing for clear demands to unite around. Unions are weaker now than they were in the 1980s and 1990s.

The labour movement could rebuild its strength by uniting people around what everyone needs, decent, secure incomes from contributing their fair share of effort, via a shorter standard working week.

An industrial and political campaign

A campaign for a shorter working week can start from gathering together activists who agree with it, to map out how to develop industrial and political campaigns for it. Particularly important groups for seeking organisational and individual endorsements are the Australian Unemployed Workers Union (AUWU), Anti-Poverty Networks, unions representing casual and low-paid workers, and sectors that have been most-affected in the pandemic, and socialists.

The support of the AUWU could play a critical role in winning support for solutions to unemployment. As people find jobs they could take these ideas into their workplaces. The AUWU already has support from some unions including The National Union of Workers and the Electrical Trades Union.

Industrial – workers and unions

Determined industrial campaigns can have leverage, build commitment amongst workers, and win protections, that a political campaign alone cannot.

This means translating the concept of shorter hours with no loss of income into specific demands in Enterprise Bargaining Agreements and awards. In Britain that takes the form of demands for a four-day 32 hour working week.

This could only be pursued by also challenging restrictions on union claims. Since 1986 “claims for reduction in standard weekly hours below 38, even with full cost offsets” have not been allowed” (Australian Conciliation and Arbitration Commission 1986 National wage case)

Supporters would need to advocate and organise for it in their workplaces and unions.

Politics – Labor and Greens

There are think tanks and advocates for a shorter working week putting up a case that it would be good for productivity. Whilst that may be so, governments have been remarkably immune to rational arguments for changes that undermine pressure on people to supply their labour, such as raising NewStart.

Commitments from Labor or the Greens to support shorter hours would be helpful, but they’re unlikely to legislate, or even be in a position to legislate, for shorter hours and secure employment without energetic campaigning, and especially industrial demands and campaigns.

Productivity based rationales overseas have seen a shorter working week accompanied by employers taking control by averaging hours, cutting overtime pay, and freezing wages (Workers’ Liberty).

We need industrial campaigns to make sure that shorter hours benefit workers.

Other solutions for jobs and incomes

A shorter working week is not the only approach being advocated to solving the problem of unemployment and incomes, from the perspective of the needs of people, rather than capital. Other demands include a guaranteed liveable income, a job guarantee and job creation programs.

They all have a role to play. The strength of the shorter working week demand is that it can be pursued both politically AND industrially, and it meets needs for freedom from work, as well as social inclusion through work.

Governments are considering various longer term spending options for job creation. We have to contest the terms of these:

• Environmentally beneficial, not destructive
• Public ownership and operation, not contracting out for profit
• Union rights, wages and conditions, not to anti-union operations
• Set up to meet needs of people, not to make it easier to make profits
• With a government backed job guarantee, offering useful work to all who want it.

Workforce statistics

The workforce in Australia is nearly 14 million people out of a population of 25.6 million.

Unemployment

Unemployment around 5-6% had become normalised over the last 25 years, even called full-employment, or the “natural rate” of unemployment, that would not accelerate inflation.

COVID-19 lockdown: More than 1.4 million workers suddenly and unexpectedly found themselves faced with the ignominy, and financial distress of unemployment.

30 April 2020 – The ABC reports about 1 million people on Job Seeker.

Unemployment is expected to be between 10-15% of the workforce (of nearly 14 million people) for at least the rest of 2020.

Underemployment and insecurity

October 2019 – AUWU reports 3 million people looking for work in Australia.

April 2020 – Roy Morgan Research reports over 2 million people needing work, or more work, before the lockdown, and 3.92 million at the end of March.

Less than half of employed Australians have permanent, full-time employment with leave entitlements (Centre for Future Work).

Jobs on a 4 day week

If the 6.5 million full-time jobs based on a standard 38 hour week (most recent Australian Bureau of Statistics data on hours of work, May 2018) before the pandemic, were cut to 32 hours, and the time made up with more full-time 32 hpw jobs, that would mean 1.2 million extra full-time jobs.