How to work less: Lord Skidelsky on reducing the working week
The growth in productivity brought on by emerging technologies should allow working hours to fall and living standards to rise. So why are the benefits being captured largely by employers? Lord Skidelsky sets out how government can redress the balance
My report on ‘How to Achieve a Shorter Working Week’, written with the valuable help of Rachel Kay, has just been published by the Centre for Global Studies and the Progressive Economics Forum. I wrote it at request of the Shadow Chancellor John McDonnell because working shorter hours are something I believe in. In fact, I wrote a book with my son – How Much is Enough? (2012) – which made the case for shorter working hours as part of the good life.
The philosophy of the Report is very simple. The replacement of human effort by machine effort should enable hours of work needed to earn a living to fall, freeing up time for other things.
This process has been happening ever since the Industrial Revolution. In the mid-19th century a 60-hour work week – ten hours a day and one day off – was common. Today the full-time norm is 42.5 hours. Then, there were no paid holidays; today, all workers get at least a month off.
So the question is: why not just allow the ‘natural’ process of hours reduction to continue? Why do we need a ‘policy’ on hours?
The answer is that the fall in hours is not ‘natural’. Since the 1980s they have stopped falling, despite the continuing advance – at least till 2008 – of productivity. Had average hours continued to fall in line with post-war productivity trends they would be at 35, not 42.5 a week.
This highlights an important truth. Productivity growth does not cause hours of work to fall; it enables them to fall. Whether they fall or not depends on other factors.
I think it’s reasonable to assume that people haven’t been getting a lot greedier since 1980. An increase in greed could, of course, explain why hours of work have stopped falling: people would be using their higher incomes to consume more rather than cut down on their work effort.
Of course, people do want more goods and services, but in the past they have also taken advantage of productivity growth to work less. It is the weakening of push for hours’ reduction that is striking.
Historically, the push for shorter hours came from a combination of policy from above and pressure from below. The Ten Hour Act of 1847 and the Holidays With Pay Act of 1938 are examples of hours reduction through policy; in 1919-20 and again in the 1940s it was trade unions who achieved work reductions for their members as part of deals covering pay, hours and conditions of employment.
Between 1945 and 1975 the government’s part was to keep labour relatively scarce by keeping unemployment low: unemployment average less than 2%.
This increased labour’s bargaining power, putting trade unions in a position to negotiate deals with employers to secure for workers the fruits of productivity gains in the form of higher real wages and shorter hours.
Since the 1980s these levers have been broken. Government has abandoned full employment policy, and union power over the wage bargain has been shattered by legislation and changes in economic structure.
As a result, the gains from productivity growth have been largely captured by employers. And this process is set to continue as automation spreads through the economy.
Intervention is needed to restart the engine of hours reduction, and to this end the Report proposes four policies:
- Reinstatement of full employment as a goal of policy.
Reduction in hours cannot be built on cheap labour supplies. This does not mean a return to the discretionary Keynesian demand management of the 1950s and 1960s, which ran into severe problems.
The Report proposes instead a Public Job Guarantee. Put simply, the government as ‘employer’ of the last resort should guarantee a job or training to any job-seeker who cannot find work in the private sector, at a fixed hourly rate, which should not be lower than the national living wage. Among its other benefits this would make it impossible for private employers to undercut national minimum wage legislation.
For the first time since the Industrial Revolution there would no longer be a ‘reserve army’ of the unemployed and underemployed to force down wages and push up hours of work.
- Investment in the public sector
The government should use its position as public employer to boost productivity growth in the public sector, and so be in a position to negotiate with managers and public sector unions a phased reduction of hours to 35 over ten years for all public sector workers.
- Use of procurement policy to promote training and hours reduction in the private sector.
It is especially important to ensure that automation does not lead to ‘technological unemployment’, and multiplication of precarious, dead-end jobs.
- Establishment of sectoral partnership forums of employers, employees, unions, and governments to fill the vacuum left by the demise of collective bargaining
Because the Report rejects the French approach of a 35-hour cap on working hours for all workers, some commentators have concluded that it is somehow against shorter working hours. This is completely wrong. The rejection of ‘one size-fit all’ legislation was for good reason: the single size does not fit all heads, and the French law has been discredited through having to concede too many exceptions and loopholes.
The Report is passionately in favour of people having to work less than now, without loss of pay. It says that automation makes this possible. It proposes feasible methods of getting there. It can be taken up by any political party.
Lord Skidelsky is a crossbench peer