Working Time Arrangements And Economic Security: Issues For The Labour Movement

1. Introduction

2. Current Trends in Working Time

3. What are the Issues?

4. Policy Options for Unions

5. Summary

6. References

Thank you for inviting me to address this timely seminar

Working Time is one of the key issues in Australian Public Policy. It will play an important role in the debate about Australia’s economic and social structure now, and in years to come.

It is important as it encompasses issues of economic security, social equity and the quality of working life.

Trade unions throughout the country are being told by their members of their anxiety over job insecurity, work intensification, increased work for the same pay (or sometimes less pay), and the difficulties of providing sufficient income from current working hours to meet the needs of their families.

These concerns prompted the ACTU to put working hours in a prominent place at ACTU Congress in Brisbane last year and it will also be a key part of our agenda this year.

I also note that the ALP is playing an important role in promoting the issue of working time and economic security. This has been done successfully by Bob McMullan in Industrial Relations, Martin Ferguson in Employment and now by Cheryl Kernot. It is vital that the industrial and political wings of the labour movement have a close and regular dialogue on the issues of working time and economic security so that appropriate policies can be developed for the next Labor Government.

I wish to do three things in this paper.

Firstly, I wish to outline briefly some of the trends in working time. Much of what I have to say draws on the work of the academics who are here today.

Secondly, I wish to draw from the research some of the key policy issues facing trade unions on working time.

Thirdly I will outline some of the policy options are being discussed.

In the lead-up to the 1997 Congress we produced a ‘Discussion Paper on Working Time’ which takes stock of current research on working time both in Australia and overseas.

The Discussion Paper tracks the decline in the ‘standard model’ of working time and its associated industrial arrangements. This was clearly illustrated in the report by the Brotherhood of St Laurence and ACIRRT, presented in the first stage of the Living Wage Case. It provided some important facts about working time arrangements in the contemporary Australian labour market. It is evident that the labour market has changed quite dramatically in the last 20 to 30 years and there are now a diversity of working time arrangements in Australia. The full-time, 38 hour week of 9 to 5 Monday to Friday working days is no longer ‘typical’ of how most Australians work. Some of the labour market trends in the ACIRRT report bear this out. In addition, recent data from the ABS ‘Working Arrangements’ Publication (ABS Cat No. 6342.0) and AWIRS 95, confirm these trends.

Some key statistics are provided in Attachment 1 – Tables and Charts.

The trends show that:

1. Male, full-time work is declining….whilst female, part-time work is growing. [See Table 1 and Charts 1 and 2]

2. Australia is experiencing one of the highest levels of part-time and casual work in the OECD – indeed the high level of precarious employment faced by many workers in Australia (in terms of casual and temporary work) is not shared by the majority of industrialised countries. [See Tables 2 & 3 and Chart 3]

3. Average hours worked has increased and only 53% of employees in full-time employment work a ‘standard working week’. The ABS data also show that the proportion of employees working Monday to Friday fell from 64% to 60% between 1993 and 1997 (ABS Cat. 6342.0). Also, there has been an increase in the number of workers with flexible start and finish times.

4. An increasing number of part-time and casual workers are wanting more work whilst existing full-time employees are working excessive hours. [SEE CHART 4] 5. There is an increase in workplace stress due to excessive hours in terms of work intensification, heavier workloads, and a difficulty, particularly for women workers in balancing work and family responsibilities. This is shown in the evidence presented by low paid witnesses in the recent Living Wage Case who told the Commission of increased work intensification despite only receiving award safety net adjustments.

There is also anecdotal evidence of this from the ACTU Occupational Health and Safety Unit in their “Stress Campaign”. The OH&S unit conducted a survey of union members which found a ground swell of concern about work-related stress. A preliminary analysis of the first 4000 responses indicates that the following, among others, are the primary causes of stress in the workplace:

increased workload 50% organisational change 36% job insecurity 27% management issues 31% long hours 29% lack of training 26%

The key issues relate to the distribution of working time and economic security. The main question is how hours of work can be distributed more equally between those in work working excessive hours, those seeking more hours, and those who are without any paid employment. Some have argued that if we took the hours worked by full-time workers (current average 42.2 hours per week) and reduced it to 38, then 26 million hours (approximately) could be made available to almost 85% of our unemployment pool. [see McMullan (1997)].

Unfortunately it is not as simple as that. All workers are different so it is not possible to do a straight hours/people swap. Much of the overtime is in trades and managerial areas with high skill requirements.

In addition, an attack on paid overtime will weaken the structures of the union movement, especially in strong areas of unionisation and recruitment.

We must remember that many workers work extra hours for regular income. The ACIRRT Study showed that trades, plant and machine operators are occupations that rely heavily on overtime. This is also born out in recent ABS data on working arrangements.

The ABS estimates that almost 2.3 million employees worked overtime in August 1997 (34% of total employees).

Of those who worked overtime, 38% received overtime pay, 35% were not paid and payment was included in salary packages for a further 23%.

Certain occupations received overtime that was nearly always paid. This is shown in Table 4.

For example 83% of Labourers who worked overtime were paid for it.

This figure was also high for Intermediate production and transport workers (83%), Tradespersons (75%), and Elementary clerical workers (59%).

By contrast unpaid overtime is high for professionals (55%) and managers (45%).

Paid overtime is an important part of employee income – especially employees who are union members.

Occupations that provide paid overtime have high rates of unionisation and high union wage premiums. [See Table 5 and Table 6]

We must remember too that the provision of regular hours and paid overtime is a key reason why union membership pays a premium for low are middle income occupations. There is also a strong diversity of employee preference on hours.

The AWIRS 95 survey noted that 75% of all employees reported that they were happy with the hours they worked. Another 16% said they would prefer to work fewer hours; but these were likely to be managers, professionals and other high income employees.

Because of this diversity the ACTU believes that this issue must be pursued with regard to the preferences of union members in their respective unions. It is important that this issue be considered by workplace representatives in terms of their specific needs and circumstances of their particular workplace. There is no “one size fits all” solution – the process should recognise the diversity in the workplace. This is reflected in the 1997 Congress Resolution on Working Hours to which I now turn.

At Brisbane Congress, the union movement resolved to set up a Working Hours Committee to assist affiliates in the pursuit of bargaining, award, and recruitment strategies in relation to working hours. The committee’s work will assist with the spread of information between unions on working hours issues and responses relevant to varying industry sectors.

The committee will look at a number of policy options for unions. These are discussed below:

(i) Reduce Standard Working Hours

One possibility is to reduce standard working hours. This has been proposed by French Prime Minister Jospin.

Reductions in standard working hours have been seen as a means of both improving the distribution of work between the employed and the unemployed as well as improving the quality of working life by addressing the balance between work and leisure.

Research by ACIRRT on European initiatives to reduce the standard working week indicate that reductions in the working week do not have any significant effect on reducing unemployment. As I understand it, successful initiatives in employment terms, such as the German union IG Metall’s shorter hours campaign, have depended on factors such as: an industry with a relatively high concentration of full-time employees and high levels of productivity growth; effective union organisation at the national and local level; worker and employer commitment to the objective of employment redistribution; complementary mechanisms (such as overtime capping) and safeguards to ensure any redistribution is equitable and does not result in hardship for existing employees.

Whilst the policies were not considered successful in reducing unemployment substantially there were other benefits. These include reducing excessive hours and providing greater flexibility for employees to balance working time with family commitments.

(ii) Early and Phased Retirement Arrangements

These initiatives are directed to improving the transition from work to retirement, enhancing flexibility for employees over their working life and facilitating redistribution of working hours.

Early retirement involves the lowering the retirement age which can be accessed by workers on a voluntary basis. Phased retirement involves the gradual reduction in hours worked by employees near retirement age, again on a voluntary basis, and generally from full time to part time.

Initiatives in Scandinavian and European countries directed to phased retirement have been integrated with pension and other social security arrangements to ensure that workers who take advantage of such initiatives are not financially disadvantaged either in access to income during the phasing in period and in relation to their future access to pension and social security arrangements.

In Australia any consideration of early retirement or gradual retirement arrangements would need to take account of social security, superannuation and taxation arrangements.

In addition, early retirement could be linked to a traineeship and/or mentoring to assist job creation.

(iii) Increased Leave – 48/52 Schemes

Increased leave arrangements include 48/52 schemes and sabbaticals.

The “48/52” schemes have been developed in white collar occupations in the public sector and large organisations such as universities. Under this scheme the employee is paid for 48 weeks averaged over the whole year. This allows them to “purchase” an additional four weeks annual leave to a total eight weeks annual leave taken per year.

Safeguards which must be considered include ensuring that the scheme is accessed on a yearly basis and is voluntary, maintaining entitlements on a pro rata basis. Any arrangements which require employee contributions, such as superannuation should be modified to prevent any financial disadvantage that may arise.

(iv) Increased Leave – Sabbaticals

Schemes developed in Scandinavian countries involve the right of employees, by arrangement with their employer, to access up to one year’s leave for academic and training purposes. These schemes are integrated with social security arrangements – during the period of leave employees receive full unemployment benefit, which is income related – and wage subsidy schemes to enable employment of unemployed during the period.

In Australia income support through unemployment benefits would not be adequate for employees taking sabbaticals and hence any arrangements would need to consider social security arrangements topped up to match the average employees income as well as being integrated with wage and training subsidies for the employment of replacement employees.

There may be scope to introduce sabbaticals as part of enterprise agreements; that is a notional percentage of the overall settlement could be allocated to accruing sabbaticals.

(v) Overtime Restrictions

Capping of overtime have been introduced in Europe and Canada to address the issue of excessive hours and to improve the distribution of work.

They can involve either limiting total hours worked per week; or total hours worked per year.

There are some fundamental problems with this option:

1. the fact that overtime is concentrated in certain industry sectors and a high proportion of those worker’s income is made up of overtime payments; [see Table 4 referred to above];

2. the fact that paid overtime occurs in unionised industries where unions provide a significant premium for their members; [see Tables 5 & 6]

3. in order to avoid creating excessive casualisation in these industries such initiatives will need to be integrated with other strategies to provide employment and income security for casuals.

(vi) Job Sharing

One option often suggested to solve unemployment in recent times is “job sharing” – the sharing of a full-time job by two workers. These initiatives are limited to reducing standard hours and enhancing flexibility for workers over their working life.

Whilst this could be an attractive option for certain workers in white collar industries, the international evidence shows it is no solution to high national unemployment levels. ACIRRT has noted that the employment effects of work sharing initiatives have been modest “…usually generating or maintaining jobs for fewer than 0.5% of the labour force.” [Brotherhood/ACIRRT Report, p.1].

(vii) Career Breaks

Career breaks, like part time work and leave arrangements such as sabbaticals, should be considered with the objective of enhancing worker’s flexibility during their working life. The issues and safeguards referred to in relation to leave arrangements and part time work are relevant here.

(viii) Safeguards and Protections for Part-Timers

The ACTU is keen to ensure that certain safeguards are in place to protect part-time workers from inconsistent hours and income.

Of concern to the ACTU is the application of provisions in accordance with s.89A(2), in respect of part-timer workers. The recent decision of the Full Bench regarding allowable matters for the Hospitality Industry Award, made it clear that awards will be varied on a case-by-case basis, depending on the circumstances of the industry involved, [Print P7500].

In the Hospitality Industry, the decision has increased certainty of hours for part-time workers. The previous Award had two categories of part-time worker – “flexible” part-time worker (who received a 10% loading) and a specific part-time worker. The new provisions guarantee certainty of hours for part-time workers in this industry – deleting the category of flexible part- time worker, which was ostensibly another category of casual employment. A definition of a “regular part-time employee” is to be inserted in the Award.

The Full Bench decision also confirmed that there should be no reduction in entitlements as a result of the application of allowable matters. This includes attempts to reduce entitlements through the application of facilitative provisions.

Safeguards for part-time work were also provided in Family Leave Carers Test Case in 1994.

(ix) Skill-Based Employment Pools

Employment pool initiatives are designed to provide employment and income security for casual labour. They are relevant to Australia given the recent rapid growth in casual employment and outsourcing and the fact that 70% of part time workers are employed on a casual basis.

Employment Pools should be directed to: provide effective industrial regulation of casual and part time workers;

effectively address outsourcing;

enhance income and employment security for casual and part time workers;

active union recruitment and organisation of casual and part time employment.

Employment pools should be: targeted to specific industry sectors or local labour markets;

subject to awards or industrial agreements;

integrated with opportunities for skill formation and career advancement;

These are just a few suggestions that could be considered collectively by the union movement. This list is not exhaustive. It should be stressed that relevant options respect industry and occupational diversity in working time arrangements.

In conclusion, I thank you once again for the opportunity to speak at this seminar on working time. Whilst working time reform is an important issue that will be collectively tackled by the union movement (and by a future Labor Government) can I add three caveats to the analysis presented.

Firstly, work sharing should not be held up as a panacea to Australia’s unemployment problem.

Appropriate economic and industry policies are the main instruments needed to promote employment. Working time initiatives will not work in the absence of a growing economy and a willingness by employers to invest and create jobs. The ACTU does not support purely ‘supply-side’ solutions where workers make sacrifices but employers do not invest or create employment opportunities, and governments absolve themselves of responsibility.

Secondly, “labour market flexibility” should also not be seen as the solution to unemployment. Evidence provided by Nobel Laureate Robert M. Solow of MIT on the difference between the labour markets of the USA and Europe, shows that European unemployment is not due to labour market “rigidity” in their labour market arrangements. Solow – one of the world’s most respected (and conventional) economists puts great emphasis on the importance of economic security for workers.

Solow writes:

“If pure unadulterated labour-market reform is unlikely to create a substantial increase in employment, then the main reason for doing it is the anticipated gain in productive efficiency, however large that may be. But if we respect the wage earner’s desire for job security, and it seems at least as respectable as anyone’s desire for fast cars or fat-free desserts, then an improvement in productive efficiency gained that way is not a Pareto-improvement.” [Solow, 1997, p.32]

Thirdly and finally, whilst globalisation and the opening up of the Australian economy is affecting the labour market we should not regard this as a reason to give up on protecting the most vulnerable in the economy. Research by Harvard Economist Dani Rodrik suggests that the more open an economy is the more it should put resources into economic protections including social welfare and labour market regulation. He cites evidence from examples of successful open economies that have developed active social welfare and labour market policies. Globalisation is a reason for doing more about economic security and income protection – not less and Australia’s labour market institutions have an important role to play.

ABS Various Publications

ACIRRT (1996)”Reforming Working Time” Alternative to Unemployment, Casualisation and Excessive Hours”, Report for the Brotherhood of St Laurence. Brotherhood of St Laurence, Fitzroy, Victoria.

ACIRRT, ADAM Reports (various).

ACTU (1990) “Guidelines and Negotiating Exhibit on Part-Time, Casual Work and Job-sharing”, ACTU, Melbourne.

ACTU (1995) “Casual Employment and Industrial Regulation: What Should Unions Do?”, ACTU, Melbourne.

ACTU (1997) “Discussion Paper on Working Time”, D No. 39/1997, ACTU Melbourne.

Campbell I. (1996a) “The End of Standard Working Time? Working Time Arrangements and Trade Unionisation in a Time of Transition”. NKCIR, Working Paper No. 39, Monash University.

Campbell I. (1996b) “Casual Employment, Labour Regulation and Australian Trade Unions”. Journal of Industrial Relations, Vol 38, No. 4., December.

Campbell I & Burgess J, “National Patterns of Temporary Employment: The Distinctive Case of Casual Employment in Australia”, NKCIR Working Paper No. 53, Monash University, Melbourne.

Charlesworth S. (1996) “Stretching Flexibility: Enterprise Bargaining, Women Workers and Changes to Working Hours”, HREOC, Sydney.

DEET (1991) Australia’s Workforce in the Year 2001, AGPS, Canberra.

DEET (1995) Australia’s Workforce 2005: Jobs in the Future, AGPS, Canberra.

DIR (1995) “Enterprise Bargaining in Australia”.

George, J (1997), “Too Much Work or too Little…..Unemployment, Working Time and the Australian Labour Market”, Speech to the 4th National Conference on Unemployment, University of South Australia, Adelaide, 18 June, 1997.

Heiler K (1996) “Is Enterprise Bargaining Good for your Health?”, ACIRRT Monograph, No.14, Sydney.

ILO (1995) “Working Time Around the World”, ILO conditions of Work Digest, Vol 14., ILO Geneva.

McMullan B (1996) “A Fair Distribution of Work is an Equity Issue of the 21st Century”. Speech to John Curtin Memorial Breakfast, Perth, 24 November, 1996.

Morehead et al (1997) Changes at Work: The 1995 Australian Workplace Industrial Relations Survey, Addison Wesley Longman, 1997.

OECD (1994) The OECD Jobs Study, OECD, Paris.

OECD (1996) Employment Outlook, July 1996, OECD Paris.

Probert B (1995) “Part-Time Work and Managerial Strategy” ‘Flexibility’ in the New Industrial Relations Framework”, DEET, AGPS, Canberra.

Roche W., Fynes B. and Morrissey (1996) “Working Time and Employment: A Review of International Evidence”, International Labour Review, Vol. 135, No. 2, ILO Geneva.

Romeyn J. (1992) “Flexible Working Time: Part-Time and Casual Employment”, Industrial Relations Research, Monograph No. 1, DIR, Canberra.

Rodrik D (1997) Has Globalisation Gone Too Far?, Institute for International Economics, Washington DC.

Simpson M. (1994) “An Analysis of the Characteristics and Growth of Casual Employment in Australia”, WALMR, Curtin University of Technology, Perth, WA.

Solow R (1997) “What is Labour Market Flexibility? What is it Good For?”, Keynes Lecture, Cambridge University, Cambridge UK, October.

Source: ALP Academic Forum, Parliament House, Canberra

Tim Harcourt

ACTU Research Officer