Governmental group sceptical over compulsory working time cuts

On 23 March 2000, a working group established by the Swedish government presented its report, which will serve as a basis for forthcoming discussions over possible working time reductions, either by law or through collective agreements. The working group clearly rejects compulsory legislation to cut working time.

In January 1999, the minority Social Democratic Party (Socialdemokratiska Arbetarepartiet, SAP) government which had been elected in autumn 1998, set up a working group with the task of examining - once again - the issue of working time (SE9810116N). The parties with which the government cooperates, the Left Party (Vänsterpartiet) and the Green Party (Miljöpartiet de Gröna), were also represented in the working group, chaired by Inger Segelström, the chair of the Social Democratic Women's Association (Socialdemokratiska kvinnoförbundet).

This is the fourth governmental study on the working time issue to be conducted during the past 10 years (SE9812126F). One difference between earlier reports and the new one is that the latter deals with long-term assessments, looking up to 15 years ahead. A consultative group containing representatives of the social partners has been linked to the present working group. On 23 March 2000, the working group presented its report, Cuts in the working time - for and against (Kortare arbetstid - för och emot, Ds 2000:22). The task of the working group has been to examine the conditions for, and consequences of, different kinds of working time reductions. The analyses that have been made deal with both economic aspects and welfare aspects. The group had been requested only to present different suggestions, so as to stimulate a public debate.

From 70 to 40 hours

From the mid-19th century to the mid-20th century, normal weekly working time fell from 70 to 48 hours in Sweden. At the same time, the right to paid holidays was introduced progressively, from a couple of days to three weeks per year. Reductions in working time were discussed mainly from the health point of view. During the following decades, the discussion was more focused on welfare aspects, and on how to share the benefits of the "welfare society". The decrease in statutory working time, from 48 hours to 40 hours per week, which occurred up to 1973, was seen as one way to give workers a share in increasing economic prosperity. Working time was also shortened by prolonging statutory annual leave to five weeks and by other reforms, such as extended parental leave. In the 1990s, the situation changed. There was a huge economic crisis and the rate of unemployment increased many times over. The level of unemployment gave rise to a discussion of a cut in working time, seen as a method of reducing unemployment by sharing out available work.

At present, working time is regulated by the Working Hours Act (Arbetstidslagen 1982:673). Statutory normal working time is 40 hours per week, excluding breaks. General overtime may be worked up to a maximum of 50 hours per month and 200 hours per year. This law may be deviated from by collective agreements, and in large parts of the labour market there are collective agreements with stipulations on working time, usually providing for shorter working hours than the legal norm. In the 1998 collective bargaining round, the working time issue was extensively debated (SE9806190F), and working hours regulations were changed in about 25 sectoral agreements, with the social partners themselves setting the level of cuts in working time. For example, in metal manufacturing, working time arrangements have been changed successively over several bargaining rounds. The working week for a metalworker working on day shifts has been shortened by 54 minutes, which are put into a working time "bank" and may be used for time off by the employee, by arrangement with the employer.

The effect in 15 years' time

The National Institute of Economic Research (Konjunkturinstitutet, Kl) has calculated, on behalf of the working group, the economic effects of different kinds of cuts in working time in the long-term perspective, up to 15 years in future. In the long run the effects of a reduction will be similar, irrespective of the way in which it is carried out, the Institute finds. The crucial point is the size of the cut in working hours. The greater the reduction, the more the effects will be in terms of reduced economic growth and slower growth in consumption. One problem with working time cuts in Sweden is the growth in the number of older people in the population (SE0003129F). The labour supply situation will worsen in about 10 years' time, with a smaller number of workers available to do the available jobs. If cuts in working time were to be carried out at the same time, the labour supply problem could become even worse.

The positive effects of working time reductions listed in the report include more time for workers to spend with their families and for hobbies, rest and recuperation. A reduction could lead to less stress at work, less sick leave and better health. More workers might be able to work longer before retiring. The reduction could also give part-time workers the possibility to work more, if they prefer, and might lead to better opportunities for equality between women and men. Employers could adapt working hours in a better way to the demands posed by company activities, if the cut in working time led workers to accept greater flexibility.

On the other hand, the negative effects of a working time reduction might include a decreased supply of labour and a weakening of economic growth, which in turn would jeopardise the financing of the health service, schools, other public services and pensions systems. If working time were cut in a manner that drives up the pace of work, the reduction might lead to more overtime work and more stress. Further, employers' possible demands for more flexibility might lead to higher demands on workers.

Reduction through bargaining

KI has outlined three main models for a possible reduction in working time: through collective agreements; through changing the current legal norm, which may be varied by collective agreements, of 40 hours per week; or through compulsory legislation, with no option of deviations through agreements between the social partners.

If a cut in working hours is achieved through collective agreements without any intervention by the state, the bargaining parties will have more consideration for each others' positions and for the special requirements of individuals, the working group states in its report. A working time reduction negotiated in this manner would not risk increasing wage costs and creating greater labour shortages. The experiences of the past few years show that agreements on cuts in working time tend to be concluded in branches with relatively high pay levels, and where the majority of workers have full-time jobs.

However, the report states that cutting working hours though collective agreements involves risks for groups of workers with low wages and in a weak position, who might not benefit from such reductions in working time, or might not benefit to the same extent as other workers. As the final shape of working time changes would be based on the different conditions in every single sector, it is possible that not every worker would benefit from an hours reduction. In low-wage sectors, or those with many part-time workers, the interest in pushing the issue of working time cuts is not so high as it is elsewhere, the report states. The priority in such sectors is rather increasing pay levels and the rate of employment.

If working time is cut by reducing the current statutory working time norm of 40 hours per week, the consequences may be different, the working group believes. While such a reform would apply to a larger part of the labour market than a purely collectively agreed reduction, it might raise wage costs and make wage-setting more difficult in, for example, areas where there is a shortage of labour. There is also the risk that the reform could not be adapted to local conditions.

The third model, whereby compulsory legislation would impose an hours cut, is totally rejected by the working group. The reasons given are that such a legislative initiative would mean a major encroachment on the social partners' freedom to negotiate and would be a hindrance to the desired adaptation of rules to the different conditions in different branches. Compulsory legislation would be unrealistic and break with Swedish traditions, the working group states.

Mona Sahlin, the responsible Minister at the Department of Industry, Employment and Communication (näringsdepartementet), commented on the day that the report was released that working time reductions are not without costs, and that a "cut in working hours may mean a higher quality of life for many people. The best solutions are to be found through agreements. Collective agreements are always better than legislation,". The Swedish Employers' Confederation (Svenska Arbetsgivareföreningen, SAF) agrees on the whole with the Social Democrats' view. "It is time to do away with the issue of a compulsory general working time reduction," says Göran Tunhammar, managing director of SAF, "let the negotiating parties at all levels continue to decide on working time matters." The Swedish Confederation of Professional Associations (Sveriges Akademikers Centralförbund,SACO) is also not in favour of legislation.

Support for legislation

The Swedish Confederation of Professional Employees (Tjänstemännens Centralorganisation, TCO), however, wants legal regulation. The TCO chair, Sture Nordh, anxious about the growing stress and ill-health problems among white-collar workers, has issued a proposal for legislation, building on the needs of different employees and different company activities. The (unofficial) proposal involves a new Act of Working Hours giving legal support to negotiations over working time cuts. The starting-point should be employers' and employees' common interest in creating good working conditions. A new law should also consider that individual workers have individual needs, different activities have different requirements and that human beings have physical, mental and social limits on how much they can work. These requisites mean that there should, for example, be a new rule on an average 37.5 average working week over a reference period of 12 weeks, added to the present 40-hour week rule. Overtime limits should be reduced from 200 to 100 hours per year.

The Swedish Trade Union Confederation (Landsorganisationen, LO) is also generally positive about legislation. Its chair, Bertil Jonsson, stated in January 2000 that he was in favour of legislation mainly on grounds of achieving justice between all groups of workers. Many trade unions reacted to this view, with the majority of unions organising blue-collar workers wanting working time issues to be governed by collective agreements. Mr Jonsson has now somewhat moderated his views. He estimates that collective bargaining will remain the chief way of regulating working time issues for the next couple of years: "however, this is a system that gives unfair effects. Legislation will then perhaps be necessary later on."

The argument used in the early 1990s about cutting working hours in order to create more jobs is not discussed in the working group's report. However, the Left Party's programme includes the demand for the introduction of a 35-hour week through compulsory legislation, and it will go on pushing for this in parliament. This proposal is based on an assumption that cuts in working hours will reduce unemployment and increase employment. The minority government's other cooperation partner, the Green Party, also wants legislation, in the form of lowering the working time norm in the Working Hours Act, above all on grounds of ill-health and stress.

The social partners' have three months to make their statements in response to the report, preferably - according to the working group - to show their willingness to agree working time cuts in the next major collective bargaining round in 2001. If the social partners do not cooperate in this, there will be legislation, Ingrid Segelström, the working group chair, stated as the report was released.

Commentary

The working group does not want to see compulsory legislation on working time reduction. However, the group does not state any clear preferences regarding the other two alternatives - hours cuts through collective agreements or lowering the working time norm in the Working Hours Act. The present Social Democratic government has been criticised in some quarters for being passive for too long on the issue of possibly reducing working hours. In the 1998 bargaining round, some trade unions in industry protested when agreements provided for a small cut in weekly working hours to be swapped for more power for employers to decide on the planning of the working hours. In spite of the risk of new protests, it is plausible that the government, supported by the majority of the social partners, may announce that it will take the collective agreement route and let the social partners take care of working time issues, for at least some years ahead. On the other hand, and if the social partners do not object, a compromise might be reached in parliament resulting in a progressive legal reduction of the 40 hours weekly norm over five to 10 years. (Annika Berg, Arbetslivsinstitutet)