Opinion: It's often assumed that reductions in the number of hours worked must mean a reduction in pay, but this does not have to be the case
Europeans are working fewer hours per week than in years past. On a recent episode of RTÉ Radio 1's The Business, it was pointed out by Dr Laura Bambrick from the Irish Congress of Trade Uniions (ICTU) that European workers currently average slightly over 36 hours of work per week, but Irish workers average fewer hours per week (slightly over 35), in part because of the relatively high levels of part-time work in Ireland.
The show goes on to expain that classic economic theory has long predicted that leisure time in modern economies should be expected to grow as work processes and technology advance. This reduction in working hours and the substantial growth in flexibility in work arrangements such as remote work and four-day workweeks might suggest that the rosy future long promised by economists is starting to arrive. However, a closer examination of the changes in hours worked and their implications suggests that we should not hold our breath waiting for that future.
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From RTÉ Radio 1's The Business, Dr Laura Bambrick on new research showing European workers prefer more time off, prompting governments to encourage a return to work.
As Dr. Bambrick notes, this reduction in working hours could pose significant problems for governments. National budgets are often predicated on assumptions about how much tax can be collected, and if a reduction in hours is coupled with a reduction in pay, budgets can come under increasing strain.
Reductions in working hours can cause serious problems for employees who are already struggling to pay bills and keep up with the increasing costs of living. The growth in flexible working arrangements and remote work has been a boon for skilled employees, who often have the luxury of trading pay for reduced or more flexible working hours, but working arrangements that reduce their pay packet are unlikely to be welcomed by lower-level employees. There are workers who can afford to take less pay in exchange for a healthier work-life balance, but this is not a choice everyone can afford or make.
The assumption underlying much of the discussion of reductions in hours worked is that this must necessarily imply a reduction in pay. This does not have to be the case. Hourly pay in the norm in many jobs, but pay that is linked to the number of hours worked creates hazards for workers (for example, a reduction in hours means that you cannot pay your bills).
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From RTÉ Radio 1's Morning Ireland in Jan 2022, RTÉ Business Editor Will Goodbody on how thousands of public servants will have their working hours reduced
It also creates perverse incentives. If you are paid by the hour, it is in your interest to work as slowly as you can without getting into trouble, and anything you do to accomplish your tasks in fewer hours comes out of your pay packet.
Perhaps it is time to move away from pay by the hour. Research on remote work suggests that workers can be substantially more efficient and get more done in less time if they are given flexibility. There are numerous models for compensation in this regard, including getting paid for what tasks you accomplish instead of how long it takes you to accomplish them or getting paid a salary rather than an hourly wage.
Interestingly, the problem of trading time for money has received significant attention in the business press, but in a very different context than hourly work. Entrepreneurs are routinely advised on ways to avoid trading time for money, such as charging more for their services if they are not bringing in enough income in a typical working week. I have yet to see an article in the business press suggesting a similar solution to the reduction in tax revenue if working hours are reduced. If you must pay workers by the hour, the tax revenue problem could be neatly solved by paying workers more per hour.
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From RTÉ Brainstorm, why class in the workplace remains a taboo subject in Ireland
The traditional five-day 40-hour workweek is starting to lose its appeal and workers in many industries are gaining flexibility and control over their work lives. However, these gains are unevenly distributed, and hourly workers have not yet seen all benefits their salaried counterparts have experienced as work transitions from rigid to more flexible structures.
When people call on organisations to share the wealth, they usually think narrowly in terms of money. But perhaps it is time for a broader slice of the workforce to start receiving the benefits that have thus far been largely restricted to salaried office workers. This would mean more autonomy, more flexibility and better quality of life. Ending the practice of punishing workers because you cannot or will not offer as many hours per week as you once did might be a good place to start.
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The views expressed here are those of the author and do not represent or reflect the views of RTÉ
