Four-day week – analysis?

datePosted on 23:17, February 19th, 2009 by Lew

Since I spend my workday up to my eyeballs in the media, it’s very rare that I watch ONE News Tonight, and even rarer that I come across something I don’t already know.

12152008_bigdig
(Red Planet Cartoons)

Today, I managed to elude the fact that the government is considering support for a four-day week for businesses which might otherwise consider layoffs, paying (part of?) the fifth day’s income, while staff undertake training or community work. Until Tonight, that is. This seems to me an excellent idea, if it can be well-implemented. It accounts for the necessary scaling-back in production which some industries will experience, while subsidising future productivity increases to come from improving the skill base of NZ workers, which means that once the recession passes, the country will be better-positioned to hit the ground running, as it were, and enable the government to pay back the debt which will necessarily accrue from the scheme.

(As a sidebar: that a National government is even considering such a thing represents a huge change in political culture.)

There are certainly pro- and contra- arguments to this sort of scheme which I’ve not considered; as you can tell by the cartoon, I’m not unaware of the general uselessness of make-work-for-the-sake-of-making-work schemes. Friedman’s quote, on the linked site, is especially well-taken:

“If all we want are jobs, we can create any number — for example, have people dig holes and then fill them up again, or perform other useless tasks. […] Our real objective is not just jobs but productive jobs”

The question is one of implementation: what would be necessary for a make-work scheme which results in productivity improvements down the line to be better than redundancy – the consequent productivity increase that brings as they try to better themselves, less the productivity drain they represent, being out of money and therefore not consuming, or on welfare?

This is a complex question, and I invite you to argue your corner. But please, I’m not interested in ideology-bound doggerel of the `OMG statist corrupt meddling communism’ sort, or its inverse – I’m not an economist, but I expect a high standard of analysis, the more formal the better.

L

27 Responses to “Four-day week – analysis?”

  1. Phil Sage (sagenz) on February 20th, 2009 at 05:20

    Despite the whinging of tim watkin at Pundit ans Anita’s echo at this website the most important stimulus that can be justified is to bring forward Infratructure expenditure. $9bn of “shovel ready” infrastructure spending in next 2 years as a for example if qualitatively different than the same money over 5 years.

    Put everyone on a four day week and reduce their pay accordingly. That will only mean a 20% reduction in GDP. Excellent. Keep their pay the same and see 20% inflation/ devaluation of currency as the output for a dollar of input changes

  2. Phil Sage (sagenz) on February 20th, 2009 at 05:28

    getting an analysis/spelling trade off was quite difficult. blokes and multi tasking :)

  3. Carol on February 20th, 2009 at 07:51

    And those of us who work one or more part-time jobs? – an increasing number of workers already, I understand.

  4. Anonymouse on February 20th, 2009 at 08:25

    Look here’s a rather better idea that will actually support NZ businesses

    legislate for a six day work on four day’s pay

    It’s a fucking depression: if you’re not prepared to work, there’s a nice big dole queue outside (which is why cutting the dole down to size is another important policy that should be enacted with urgency).

  5. Anita on February 20th, 2009 at 08:59

    There is a cynical lens one can use to analyse National’s suggestion…

    National has always aimed for “workforce flexibility” by promoting casualisation, removing penal rates, providing incentives for contracts-for-service and so on.

    Is this part of the same theme?

  6. Pascal's bookie on February 20th, 2009 at 09:11

    “If all we want are jobs, we can create any number — for example, have people dig holes and then fill them up again, or perform other useless tasks. […] Our real objective is not just jobs but productive jobs”

    http://digbysblog.blogspot.com/2009/02/needs-by-digby-matt-yglesias-makes.html

  7. Rich on February 20th, 2009 at 09:21

    In a lot of jobs I’ve done, if you cut out all the crap, I could do my job in 4 days and head to the beach on Fridays.

    Really, there’s a lot to be said for having firms that can’t get through the recession just close down. NZ is never going to be a competitive maker of mainstream consumer products like washing machines (unless we get completely stuffed and turn into a developing world economy with dollar an hour wages). I suspect firms like Navman and Weta will make it through the turndown, because they are actually adding a sustainable amount of value.

  8. imperial zeppelin on February 20th, 2009 at 09:59

    Last time I worked in manufacturing, the take home pay was such that many would have qualified for WINZ support such as housing benefit. When overtime was available, everyone scrambled.

    I have no reason to believe that the same situation does not persist in much of the manufacturing sector. Reducing take home pay by 20% is simply not tenable in those circumstances.

    Even in better paid manufacturing jobs, the level of personal debt and the repayment obligations probably mean that a 20% reduction in pay would be disastrous for many.

    If the government subsidises a proportion of the lost 20%, in ways other than through WINZ entitlements kicking in, then how far are we from a ‘work for the dole’ scenario?

    My understanding is that the compensation comes in return for engaging in community work, so if a worker has to work for government money then why not non-workers?

    Far better in my opinion, if a way is found to allow companies to operate on less profit without the risk of a takeover or of being at the beck and call of shareholders.

    Would it be possible to transfer sold shares to workers via some government agency? In other words, protect incomes by allowing profit margins to slide? Wouldn’t a worker with a sustained income be less liable to be so concerned about a share return from the company they work for than is the case with the traditional shareholder?

  9. Lew on February 20th, 2009 at 10:08

    I’d expect the government subsidy for the fifth day to be at least equivalent to minimum wage – after all, they’d presumably be subject to the same labour regulations as anyone else.

    L

  10. imperial zeppelin on February 20th, 2009 at 10:55

    Lew.

    I don’t think so, otherwise any work for the dole scheme would involve about three days work. Which I ( as a doley)could live with as long as the work I had to engage in was not intolerable. Four days to me and WINZ not riding me at every turn…..kind of even sounds good.

  11. Lew on February 20th, 2009 at 21:32

    Phil Sage,

    Put everyone on a four day week and reduce their pay accordingly. That will only mean a 20% reduction in GDP. Excellent. Keep their pay the same and see 20% inflation/ devaluation of currency as the output for a dollar of input changes

    Yeah. That’s exactly what I’m not talking about.

    Carol,

    And those of us who work one or more part-time jobs? – an increasing number of workers already, I understand.

    Yeah, good question. They’re more vulnerable because they’re usually not employed on set hours. I can’t see a Nat government extending such a scheme as this beyond a certain range of full-time jobs.

    But the question wasn’t one of social justice – it was one of economics.

    Anonymouse,

    legislate for a six day work on four day’s pay. It’s a fucking depression

    How is that any better than Phil’s suggestion? Two rights means you end up going backward.

    Anita,

    National has always aimed for “workforce flexibility” by promoting casualisation, removing penal rates, providing incentives for contracts-for-service and so on. Is this part of the same theme?

    The flipside of Carol’s point. If it is, they’ve got the EPMU on-side, and that takes some doing. I think it is too cynical an analysis.

    Rich,

    In a lot of jobs I’ve done, if you cut out all the crap, I could do my job in 4 days and head to the beach on Fridays.

    I often think this, and in fact, have done so in some jobs. But it’s not sustainable across a whole workforce, and it’s not always sustainable in the long term. Down-time is important; in jobs where people don’t have it, they’re often less productive than they might be if they did.

    Really, there’s a lot to be said for having firms that can’t get through the recession just close down.

    I have some sympathy for this position, but only when there are other jobs to replace them, or when the cost of intervention is greater than the cost of doiong nothing, and that’s a matter of utility, not of principle. In the case of, say, Fisher & Paykel (most recently declared TBTF) I’m not sure what effect the “let it bleed” approach would have in the long term, but I am sure what effect it would have in the short term: 1600 more families on the dole, with all the attendant social ills that brings.

    IZ,

    I don’t think so, otherwise any work for the dole scheme would involve about three days work. Which I ( as a doley)could live with as long as the work I had to engage in was not intolerable. Four days to me and WINZ not riding me at every turn…..kind of even sounds good.

    Well, I’m not aware of any work for the dole schemes at a time in NZ history where there was a living minimum wage, so it’s all a bit moot, really.

    L

  12. Carrier on February 20th, 2009 at 21:53

    There is a cynical lens one can use to analyse National’s suggestion…

    National’s suggestion? My understanding is that the suggestion came from the CTU and Greens. Key was asked about it by the media, and said that it would be on the agenda for the forthcoming Jobs Summit. Somehow out of that it takes on the aura of (almost) National policy, to be scrutinised for a secret agenda.

  13. reid on February 20th, 2009 at 22:31

    One of the things about govt spending is that it doesn’t just include the state but also local govt. Here we see a contradiction between Hide’s propensity to save money and the govt’s actions on a national level.

    The real question is, are we engaging in a salvage operation or a genuine expansion program?

    It’s a question of the economy acting like a sponge. In the face of a recession, the economy will soak up both local and national govt money like a sponge but will remain dry, without yield, until liquidity reaches saturation point. Only then will things begin to improve. Question is, what breaks first: the sponge or the ability to throw resources (liquidity) into it?

    English’s first budget will be a key message (no pun). Will he seek to balance, or will he be happy to run a deficit and if so, how much? That will indicate how much he’s prepared to spend to expand vs merely salvage. The other real question is of course, what is the taxpayer getting as a dividend for investing our money into the sponge and that revolves around whom and what are we investing in?

    What we need to keep an eye on is the percentage of govt spending as a % of GDP. Is that rising, staying the same, or even falling?

    The interesting thing is, in our case here in NZ, the private interest groups that normally oppose govt spending like the real estate and medicos, have nowhere to turn, since it is normally a leftist govt that undertakes these sorts of programs. Therefore we can expect ACT to grow in support during these coming years as those groups look to find a political voice.

    A common misunderstanding is that in a depression, wealth is destroyed. It’s not, wealth is never destroyed, it’s merely transferred. The tell as to the colour of this govt, will be to whom its largesse is transferred.

  14. Phil Sage (sagenz) on February 20th, 2009 at 22:53

    Actually Lew. I should have been clearer. Bringing forward infrastructure investment is something the government should do.

  15. ak on February 21st, 2009 at 00:49

    “that a National government is even considering such a thing…”

    Sorry Lew, but actually, they’re not considering it: as Carrier notes above, it was just another “look, I’ll look at anything” throwaway from Nicey.

    And for very good reason. The ramifications are completely beyond his comprehension. Remember that our kid is a former “master of the universe” who advised the US Federal Reserve just prior to the Glass-Seagall repeal that opened the floodgates to the madness that will now inflict misery upon billions; and that his smooth, manicured hand betrayed not the tiniest quiver as it accepted the fifty million pieces of silver that bought him the tory crown.

    Mr Key knows full well the futility of his own current tinkering and “jobs summit” bullshit in the face of our inevitable fate: it’s his sole area of expertise. To expect him to have the remotest understanding of the gruesome realities of a five (or six)-day working week at less-than-average wage (let alone DWI top-ups ffs), is a bridge far, far too far (it even eludes our middle-class commenters here).

    Yes, Lew, we can all hope, and history’s on our side. The eventual and universal assumption of the eminently salubrious values you and others so obviously yearn for and which were incubated by your parents in the seventies (wink),will come to fruition. Of that I am certain. But it won’t stem from wee Johnny’s cynical and useless PR “summit”. It’ll take a good kick in the universal groin to wake us up to the stark facts that the world’s burning up and that the US aristocracy has been sucking us dry; and that millions die gorging just as millions starve.

    That kick’s a-coming Lew, and along with it your cue. The flower children dropped the ball: don’t be fooled again.

  16. reid on February 21st, 2009 at 09:28

    To expect him [Key] to have the remotest understanding of the gruesome realities of a five (or six)-day working week at less-than-average wage (let alone DWI top-ups ffs), is a bridge far, far too far (it even eludes our middle-class commenters here).

    (a) How does this relate to his ability to manage this question – are you saying that empathy is an important quality in his decision-making here?

    (b) I disagree that he doesn’t have that experience in the first place. His upbringing, which you never forget, was more working-class, than I suspect most of us here experienced.

    Your upbringing is what sets you up as a person, not whatever it is you do or achieve after that…

  17. Lew on February 21st, 2009 at 10:52

    ak,

    Sorry Lew, but actually, they’re not considering it: as Carrier notes above, it was just another “look, I’ll look at anything” throwaway from Nicey.

    Well, they didn’t scrap it sight unseen. That constitutes a change.

    Yes, Lew, we can all hope, and history’s on our side. The eventual and universal assumption of the eminently salubrious values you and others so obviously yearn for and which were incubated by your parents in the seventies (wink),will come to fruition. Of that I am certain. But it won’t stem from wee Johnny’s cynical and useless PR “summit”.

    There’s a difference between celebrating the faint gestures of progressiveness exhibited by the current government, which I’m not doing, and celebrating the lack of ideological backlash their positioning signals, which I am. What I’m saying is that things could be a whole lot worse, and John Key should be commended by the left for not allowing them to become so.

    L

  18. Ari on February 21st, 2009 at 11:27

    Your upbringing is what sets you up as a person, not whatever it is you do or achieve after that…

    I actually disagree to a point. Upbringing is one of those deterministic factors about who you are, but it isn’t always related to who you choose to be. Key chose a much more ambitious life and can be said, to some degree, to have left his upbringing behind.

    Regardless, whether he remembers it and is willing to act to make things easier really ought to be judged on what he does, not what he thinks.

  19. ak on February 21st, 2009 at 12:20

    Lew: things could be a whole lot worse
    Oh too right – if it weren’t for the Maori Party you can bet your butt that Douglas would be cracking the whip right now…

    John Key should be commended by the left..
    You’re a lot more Christian that I, Lew ;) the only commendation I give him is for his ability to read polls, accept the fact that the electorate has moved to the left, and swallow any amount of dead fish in his quest for popularity…

    Reid: empathy’s not important, no. But an understanding of the realities of life at the bottom – the tangled, day-to-day jungle of insecurity that is casual, temporary, minimum-wage, part-time work (not to mention the mind-numbing morass of DWI top-ups), makes facile suggestions like a four-day week risible. (and as for suggesting that five days’ work could be done in four – strewth. In that person’s dreams: get a cleaning/caring/factory or suchlike job and see how valid that suggestion is)

  20. Lew on February 21st, 2009 at 12:49

    What I was looking for with this post was some sort of consideration of what sorts of activities the government might consider employing people to do for their fifth day, and the basis upon which those decisions might be made. Phil Sage is so far the only one to have sreally addressed this:

    Bringing forward infrastructure investment is something the government should do.

    Ok. They are, to an extent.

    What other sorts of things? Ideas which occur to me:

    * Look at where skill shortages are and are likely to be and train people in those fields. Examples of this might include the trades, on a sort of subsidised apprenticeship scheme, teacher-training, and general IT remedial training for sectors of society and industry with low skills in this area.
    * Train people in their own fields in their own workplaces – give Widget Operators the skills to become Senior Widget Operators.
    * `Community work’ – there are non-economic social goods which could come out of this; `Broken Windows’ type maintenance and beautification projects like clearing graffiti, repainting and repairing, and so on.

    L

  21. Lew on February 21st, 2009 at 12:57

    ak,

    John Key should be commended by the left..
    You’re a lot more Christian that I, Lew ;) the only commendation I give him is for his ability to read polls, accept the fact that the electorate has moved to the left, and swallow any amount of dead fish in his quest for popularity…

    This resembles Jordan Carter’s argument. Frankly, I don’t care if he’s sucking up to the electorate, as long as he’s implementing good (or not bad) policy. It could be better; it’s the job of the opposition to convince people of that. If it’s just the gentle incline at the beginning of a slippery slope, then at least they have plenty of time to prepare. This was the sentiment at the heart of my Whither Labour? post – how does the opposition respond? I don’t think it’s by being blindly uncharitable and trying to tear Key down. They should be welcoming the lack of reactionary change in NZ’s political culture, and looking to capitalise upon it.

    L

  22. Anita on February 21st, 2009 at 15:40

    Lew writes,

    Frankly, I don’t care if he’s sucking up to the electorate, as long as he’s implementing good (or not bad) policy.

    Do you think the Nats are implementing good policy?

    I think they could be implementing worse policy, but a lot of what they are implementing is bad, and much of the rest is innocuously neutral.

    So far their actions have srcewed over the poor, women, human rights and the environment. Care to name some counterbalances?

  23. reid on February 21st, 2009 at 15:45

    So far their actions have srcewed over the poor, women, human rights and the environment. Care to name some counterbalances?

    Can you give us some examples Anita? Re: the women, if you’re going to argue his actions are screwing them over, then your post on Women paying for bankers excess doesn’t really cut the mustard here, unless you want to argue Key’s personally responsible for pay inequity…

  24. Anita on February 21st, 2009 at 15:50

    reid,

    I’m horribly busy, so this is a very once-over-lightly list:

    The poor – tax cuts weighted toward the wealthy

    Women – stopping the process of fixing pay inequality

    Human rights – DNA samples on police “intent to charge”

    Environment – RMA changes

    Sorry, better list tomorrow or late Monday, currently have two horrible deadlines.

  25. ak on February 21st, 2009 at 15:51

    They should be welcoming the lack of reactionary change in NZ’s political culture, and looking to capitalise upon it.

    Too true, Lew. I waited in vain for this in the final weeks of Labour’s ad campaign before the election (e.g “They’re drinking our policies here…” (cut to tory mugshots, Labour gains in hand) “but we’re already here” (cut to further progressive moves), but they seemed to just run out of fizz (or money maybe?)

    Anyway, long, bumpy way to go yet; I think Ruddy and Obama will lead the way over the next couple of years, and if the Keyster rolling-mauls along to the left behind them, as you say, we should welcome it. Keeps the progressive ball rolling and frees up top talent like Helen for the big leagues. Win-win all round, and all credit to the tory cheer team who made it all possible.

  26. Lew on February 21st, 2009 at 17:50

    Anita,

    Do you think the Nats are implementing good policy?

    Mostly it’s a matter of being less-bad-than-they-could-be. For a sensible moderate(™) like me, National being in government is not a time to expect progress, but the opposite – and to the extent they’re not regressing apace, I’m thrilled.

    Working in good faith with the māori party is a huge deal for me. But beyond that they’ve grandfathered in a hell of a lot of Labour policy, and have seen fit to moderate the worst excesses of their former policies; to wit, the fire-at-will act applying only to small businesses rather than across the board; a 3-strikes law which, while bad and wrong, isn’t insane and evil like those it’s based upon; no freeze on the minimum wage; tax cuts which aren’t as deep as most National voters would have hoped for, a counter-recession plan which doesn’t consist of wholesale privatisation.

    L

  27. The Odds and Ends Drawer | The Hand Mirror on February 24th, 2009 at 13:06

    The Odds and Ends Drawer…

    Again I’ve been remiss. Again I apologise. Again I present to you a whole pile of linky love to engage you, enrage you, and generally be a useful procrastination tool….

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