The Broadbent Blog


Redistribution of Working Time Should be on the Policy Agenda

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More than twenty years ago, back in 1994, the federal government released the report of the Advisory Group on Working Time and Distribution of Work. (Disclosure: I served as the Labour Adviser.) The central message of the report has been pretty much ignored by governments ever since, even though it is more relevant than ever today in a slow growth world where good jobs are hard to find. 

The Advisory Group, appointed by then Minister Lloyd Axworthy and chaired by business economist Arthur Donner, was asked to consider how redistribution of working time from those working long hours to those who are unemployed and underemployed might enhance the quality of life of workers on both sides of the hours divide.

In principle, access to good jobs could be expanded through a reduction in the hours of work in such jobs, while those working fewer hours would gain more time for balancing work and family, for leisure and for education.

The Advisory Group placed a major emphasis on voluntary changes and on flexible options, but also called for a right to refuse overtime after forty hours in the week, and, controversially, for a one hundred hours per year limit on paid and unpaid overtime worked by any individual.

Today, the job market is even more sharply polarized between those who are unemployed or underemployed (such as the one in four part time workers who want more hours), and those who are employed in mainly full-time and permanent jobs who often work very long hours. Data from Statistics Canada's Labour Force Survey (CANSIM Table 282-0154) tell us that in any given week, one in five workers (21%) worked overtime (defined as hours in excess of normally scheduled hours) for an average of 8.2 hours, or more than one extra day per normal work week.

Unpaid overtime, mainly worked by salaried professionals, not least in public services, affects 11% of all employees. Paid overtime, mainly worked by hourly paid blue collar workers in industries like construction, transportation manufacturing and resources, affects 9% of all workers. These numbers have increased a bit since the late 1990s.

Theoretically, redistribution of working time could all but wipe out both unemployment and involuntary part-time employment, assuming a perfect overlap of skills and needed experience between those working long hours and those working no or less than desired hours. While this is unrealistic, redistribution of working time could still put a significant dent in the unemployment rate.

Canada does have one modest program to redistribute working time. Work sharing through the Employment Insurance (EI) program allows an employer and a group of employees to voluntarily avoid layoffs by shifting to a shorter work week, such as three or four days, with the employees receiving EI benefits for the regular time of one or two days not worked. Effectively workers accept a modest reduction in pay, cushioned by EI benefits, to avoid or minimize layoffs, and employers are able to retain the workforce they will need when conditions improve.

In the Great Recession of 2009-10, EI work sharing was funded and actively promoted by the federal government by relaxing the eligibility rules and by allowing benefits to last for almost one year.  At the peak in 2009, there were 165,000 participants. A similar program in Germany operated successfully over the same period on a much larger scale.

More use of work sharing today could help cushion the impact of the slump in resource prices on jobs in the hard hit mineral and energy industries. Even today, many workers in the Alberta oil and gas industry regularly work long hours. There is growing interest in using work sharing to avoid layoffs, and, even more creatively, government, employers and unions might develop programs to use temporarily reduced working hours for training in order to upgrade workers skills which will be needed in the next upturn.

The new Liberal government should also consider the many proposals which have been made over the years to amend the federal labour code so as to limit very long hours of work and to provide employees with more flexible working time options.

Redistribution of working time is not a panacea for our polarized job market. But it is a policy tool that addresses some immediate employment needs and could have a meaningful impact on the quality of life of workers.

 

Andrew Jackson is Adjunct Research Professor in the Institute of Political Economy at Carleton University, and senior policy adviser to the Broadbent Institute

Photo: tOrange.  Used under a creative commons license.