27 September 2018
Could proposals made at the TUC conference revolutionise the way we work and play?
The benefit of the five-day week
Fifty-three years ago one of my predecessors in this firm sent the following announcement to his clients: “As from Saturday 15th June, 1965, our Offices will be closed on Saturday mornings to enable the staff to enjoy the benefit of a five-day week. Our Mr Wingfield will, however, be available by appointment, for the convenience of clients.”
Mr Wingfield’s son, who later succeeded him as senior partner, recalls that no client ever requested a Saturday appointment because they had all long since adopted the five-day week themselves, and that family life was enhanced by the increased leisure time, and opportunities for days out.
A vision of the future
Of course, this was a further step in an ongoing process. The previous generation had fought for, and obtained, the eight-hour working day. So perhaps, the aspiration expressed at the recent TUC conference to achieve a four-day week should not be surprising.
Indeed, what is surprising is the very unambitious time scale: the four-day week is to be achieved before the end of the century.
To put this proposal in its contemporary context, the development of artificial intelligence and robotisation increasingly affects the workplace, and the TUC quoted a government report that estimated that new technology would add £200 billion annually to the economy.
In a recent survey, it was found that 51% of workers thought that the financial benefits of the new technology would only benefit managers and shareholders. It is not hard to see why they hold this opinion when you look at the big international tech companies.
So the TUC says that it is trying to ensure that the benefits are shared with the average worker. This, it claims, could be achieved by reducing the working week to 28 hours without reducing pay.
The reaction from industry has been mixed. Unsurprisingly most business leaders have said that such a policy would increase their labour costs and reduce their ability to compete. A few, however, have already tried the idea and reported positive results.
Productivity is the key
Some data tends to support the TUC’s ideas. The OECD reports that the average UK employee works longer hours than those of any other EU country except Austria and Greece, but this doesn’t make us any more effective at what we do.
As I have commented in previous blogs, productivity in the UK continues to be a problem.
The OECD has identified a correlation between average hours worked and productivity measured in terms of GDP per hour worked. Many developed countries outstrip the UK in this regard. Workers in Germany and the Scandinavian countries, in particular, illustrate the point that the fewer hours worked per employee, the more output is achieved per hour per person.
This seems to lend weight to the rather controversial assertion that the UK has until now remained reasonably competitive by using longer working hours to compensate for low wages, low skills and lack of investment.
The overtime trap
We should not assume that our competitors have been entirely successful in their experiments with shorter working hours. In France the working week was restricted by law to 39 hours in the 1990’s and more recently has been reduced to 35 hours. The law is not rigorously enforced, however, due to a lack of clarity on what constitutes voluntary overtime. So 35 hours has become the threshold at which overtime pay begins.
British employers will no doubt see that the introduction by law of a 28 hour week could easily lead to workers continuing to work 35 hours, but being paid at a higher basic rate for the first 28 hours and time and a half for the last 7 hours.
In fact, this outcome would probably be inevitable without a significant investment in technology to ensure that the worker genuinely achieves in 28 hours what they previously did in 35.
If this could be achieved, then everyone would share the claimed £200 billion annual uplift to GDP. Other benefits would also accrue. It is conceivable that if the weekend starts on Friday morning rather than Saturday, work-related stress might be alleviated, and parents would spend more time with their children, leading to genuine social benefits.
It may be the TUC’s mission to create such visions of Utopia, but we ought to examine the practicalities.
Although workers’ fears of being replaced by robots are probably unfounded – after all we currently have the lowest rate of unemployment for over 40 years in spite of a surge technological innovation – tech does have its downsides.
In 1965 our Mr Wingfield could be confident of not having to deal with clients on Saturday mornings, but today’s businessman or senior manager is generally expected to receive and answer mobile phone calls, text messages and emails any day of the week and at almost any hour.
The other problem is that it might be difficult to identify the workers to whim from the reduction in working hours would apply. It is reported that in the UK about 1.4 million people currently work seven days a week. Some of these will be self-employed. Some will be part of the so-called gig economy and might, therefore, be officially self-employed whilst in practice they are employees.
Others work just a few hours per week, sometimes as a lifestyle choice, sometimes because of family or carers’ responsibilities, and are just paid for the hours they work. Many workers have negotiated flexible part-time or shared jobs.
The standard 35 hour week with a two-day weekend break is now rather the exception than the rule.
The TUC’s initiative, although it highlights some fundamental issues in the British workplace and raises serious questions about the state of the UK economy, may well turn out to have restricted scope and ultimately limited impact.
If you are interested in adding your views to mine on this subject why not join us on Twitter, email me at email@example.com or contact your local UHY adviser. Alternatively fill out our contact form here.