Media Clipping — December 16, 2004, The Toronto Star

We’re working harder than ever

By Arthur Donner

Ten years ago Canadians stood at the threshold of shorter work time and a more balanced home life. A decade later, we’re still standing there. Maybe it’s time we finally crossed over.

Nineteen-ninety-four was a time of political excitement in Canada. People expected that the stunning the defeat of the highly unpopular Brian Mulroney government would trigger progressive new social programs. I was asked by the federal government to chair an Advisory Group on Working Time and the Distribution of Work. We were given a fairly ambitious mandate, including ‘to assess whether and how shorter working time and a more equitable distribution of work could contribute to job creation.’

We looked at and made recommendations on the many different dimensions of this issue, including adopting a four-day work week, working fewer years over the life cycle, fewer days per year, shorter work days, compressed work week schedules, early/phased in retirement, paid or unpaid leaves, and sabbaticals.

But at the time, the Liberal federal government was still reeling from the hangover of an inherited $42-billion budget deficit. A battle was raging between the Neo-Conservatives in Paul Martin’s Finance Department and the social-minded policy people in Lloyd Axworthy’s Human Resources Department. The Neo-Cons won. With the powerful Mr. Martin making it his mission to wrestle the deficit to the ground, the 1995 federal budget ushered in major cuts to transfer payments to the provinces, ultimately causing a cascade of program cuts in health care, education and welfare spending at the provincial level.

Much has changed in the past 10 years. The deficit has been eliminated and the debt is being paid down. Economic growth is solid and likely to remain so for a number of years. But the problems and solutions that the Advisory Group raised are as timely as ever.

A major driver of today’s growing gap between the ’haves’ and the ‘have-nots’ is still the uneven distribution of working time – with some Canadians working too many hours and others not enough. The polarization is, in fact, probably more severe today than it was 10 years ago. Canada’s unemployment rate is still above 7% and the number who involuntarily work long hours is even higher today than in the past. Many who work part time would love a full time job.

Reducing working time has historically been an important response to rising standards of living and improving family life. Between 1900 and 1945, the standard of living rose while the average work week in manufacturing fell from 60 hours to about 40. What happened was that as the standard of living of Canadians rose during the first-half of the 20^th century, workers took their ‘economic growth dividends’ partly in the form of time off from work (a shortened work week, longer paid vacations), and partly in the form of higher real wages and salaries. But this trend came to an abrupt halt in the 1950s.

Since the mid-1970s, we’ve seen an increased polarization of working time going hand-in-hand with a higher level of unemployment. This is also reflected in a very rapid growth of non-standard jobs (part-time workers, self-employed individuals, and dependent and independent contractors). Some of these trends are "cyclical", that is, they are related to recessions and/or weak economic growth, but deeper "structural" forces are also changing how we work and how long we work.

In our 1994 Report, we used an econometric model to simulate how a major reduction in average working time would affect the economy, the job market, and the cost of social programs in Canada. We concluded that a phased-in reduction of work time over a 10-year period could be a win-win situation for Canada. The measured unemployment rate would fall. Real GDP levels would be basically unaffected, but labour productivity would be higher. And governments overall budgetary picture would become rosier with fewer people needing social assistance or employment insurance. Another big benefit would be a substantial increase in the leisure time for those who were working unusually long hours.

Of course none of this happened. Canada didn’t move towards shorter working hours or increased leisure -- in fact the opposite has been true.

Given where we are today, it may be useful to see why some of the advice we offered 10 years ago can still point the way for meeting the needs of the 21st century – a more flexible labour market, greater access to employment for those in need, a more sane balance between work and family life, and enhanced opportunities to pursue education and skills upgrading.

There are still marked differences in the standard work week across Canada. The solution we advised was a legislated standard work week that is _no longer than_ 40 hours. Employees should have the right to refuse overtime beyond the 40-hour standard, and, when overtime is chosen, should be encouraged to take time off instead of overtime pay. A maximum of paid overtime work should be set—we came up with a figure of 100 hours annually. Beyond that, overtime should only be compensated with time off. Together, these steps would clearly reduce the incidence of involuntary long hours work.

Part-time workers should also be offered pro-rated benefits and a basic entitlement to unpaid education leave should be entrenched into employment standards legislation.

Clearly, the biggest threat to working families continues to be the inability to manage the competition between time at work and attention to family responsibilities. This is why I still believe that Canada needs a new set of working time arrangements.

As in the past, a deal or arrangement among government, business and labour has to happen in order to transform future productivity gains into a blend of shorter work time as well as into higher wages or salaries. This new direction should trigger a win-win solution -- improved budgets, smaller welfare bills, reduced unemployment, and increased leisure time. The unemployed and the under-employed would surely be happier if they are gainfully employed. Those who are currently working unusually long hours would see their money incomes shrink, but then they would have increased leisure time to spend with their families.

Canada also needs to level the playing field between full-time work and part time work. We have to change the policies – such as pro-rated benefits not required for part-time workers -- that act as disincentives to firms to hire full-time workers. A further dis-incentive is that the fixed cost of hiring new workers has increased too rapidly, certainly when compared to the average hourly wage level.

Finally, we need a new class of champions who will promote the value of reduced working time. Our experience to date is that business champions are not plentiful and organized labour champions are too few to count on. Business tends to see only the short term higher costs, but none of the productivity or other benefits. Organized labour also has a problem with its members who want long hours at overtime rates of pay.

However, this issue resonates with so many Canadians. Surely a new set of champions for reduced working time will emerge. The time for action is long overdue.

Copyright © 2004 The Toronto Star