PRESS RELEASE

Shrink N.S. Deficit Without Layoffs – GPI

Voluntary Work Reductions Could Save 4,000 Jobs, Study Finds

The Nova Scotia government could dramatically reduce its deficit without layoffs says a report released publicly today by GPI Atlantic, a non-profit research group presently constructing an index of well-being for Nova Scotia.

The 30-page study found that offering a wide range of voluntary work reduction options to civil servants could save the equivalent of nearly 4,000 full-time jobs, with far less harm to service delivery than are caused by layoffs.

GPI Atlantic presented the report to the provincial government, the Fiscal Management Task Force, and the Nova Scotia Government Employees' Union six months ago in response to Premier John Hamm's announcement, in his fall Throne Speech, that his government would consider voluntary work reduction options as a way of saving money. GPI Director Ron Colman said that public release of the report at this time will add a positive option that could help resolve the crisis currently facing government and labor in the province.

Savings through voluntary work reduction would be greater than from layoffs, because layoffs increase taxpayer costs in employment insurance, social assistance payments, a reduced tax base, lost production, high severance and early retirement costs, and a range of indirect health and social costs associated with layoffs. Unlike layoffs, voluntary work reduction also retains valued skills in the public sector, ensuring better service delivery, and improves workplace morale and productivity through reduced stress, absenteeism, lateness, turnover, fatigue and errors, according to historical evidence presented in the report.

GPI Atlantic, a non-profit research group that includes social and environmental factors in its economic accounts, examined a wide range of work-time reduction experiments in Europe and North America, and used results from a Statistics Canada survey that asked employees whether they'd be willing to swap more free time for a pay cut.

Analysis of the Statistics Canada results indicates that 8.3% of total work time could be cut by employees willing to reduce their work time for a proportional cut in pay. Applied to a workforce of 47,700 public servants, this indicates a potential saving of nearly 4,000 full time job equivalents. Voluntary take-up by civil servants could be increased by following the example of Belgium, which offered its civil servants 90% of their former pay for a 20% cut in work time. France has also created financial incentives for shorter work weeks by returning to employees government savings in employment insurance and social assistance.

The Statistics Canada survey also found that many Canadian employees would willingly take a pay cut in exchange for longer summer vacations with their children. A successful experiment in Albany, New York, gave civil servants the summer off on a voluntary basis, and hired university students eager for summer work as replacements on a temporary basis. Because the students were hired for lower rates of pay to fill clerical positions, the New York civil service saved substantial sums of money. The civil servants were guaranteed re-entry into the work force in September.

Other popular work reduction options are reduced work weeks with three-day weekends -- particularly attractive in the summer months, shorter work days tailored to children's school schedules, job-sharing, additional clustered days off, and banking time off for extended personal leaves and sabbaticals. The GPI report also recommends converting overtime to "time off in lieu," and phasing in retirement through gradual work reduction, as several Scandinavian countries have done. Citing a Federal Advisory group report on work time and the failure of Ontario's mandatory "Rae Days", the GPI report recommends strongly against mandatory unpaid leave, and argues that all work reduction options be voluntary.

European studies show that half the lost work time is recovered through increased productivity on the job, largely because doctor and dentist visits and other errands are scheduled during time off rather than during work hours, and through reduced fatigue on the job. The studies show that service delivery can be maintained far more successfully through shorter work hours than through layoffs.

The November 1, 1999, GPI report recommends that work time reduction options be offered on a voluntary basis for one trial year before resorting to any mandatory measures or layoffs, in order to assess the depth of cost savings that can be achieved in practice. Based on successful experiments elsewhere, the report also recommends that voluntary short-hour workers have equal opportunity for career advancement and training, and that hourly pay rates, benefits and seniority be protected to encourage civil servants to explore the options.

Beyond the cost savings to government, the report notes the potential for improving employees' quality of life, through increased leisure time, reduced stress, and improved work-family balance. By contrast, GPI Atlantic states, both layoffs and overwork have been shown to cause high stress, with a recent medical study demonstrating equal risk of heart attack for the overworked and the unemployed. "Layoffs generally increase the workload for remaining employees," says Colman, "so the increased polarization of hours causes stress both to those laid off and those retained."

The GPI report cites European evidence to show that decentralized implementation of work reduction options through joint union-management committees at the workplace can more successfully protect service delivery than across-the-board reductions that do not consider individual employee needs or specific service needs.

Colman expressed sadness that the GPI recommendations last fall had not been tried before resorting to mass layoffs. "But it's not too late. Shorter work time options can save a lot of pain and still produce significant savings and deficit reduction." Colman hopes that the public release of the GPI report at this stage can offer a positive way forward out of the impasse, confrontation and bitterness that currently exist.