Working time report presented to Alliance for Jobs

In May 2000, Germany's tripartite national Alliance for Jobs discussed a report on working time policy drawn up by the group of social scientists which assists the Alliance's work. The report emphasises that working time policy plays an important role in labour market reform, and states that flexible working time - and in particular the increased use of working time accounts - offers various opportunities both to maintain and create jobs and to meet individuals' demands for further training, childcare or early retirement.

The tripartite national "Alliance for Jobs, Training and Competitiveness" (Bündnis für Arbeit, Ausbildung und Wettbewerbfähigkeit) (DE9812286N) is accompanied by a group of four social scientists, who work either in research institutes related to employer's associations or trade unions, or in universities. Their role is to analyse the German labour market against the background of international experiences and to offer ideas for future policies. The group forms part of the Alliance's working group on "benchmarking", which aims to bring experiences from other countries into the German debate in order to develop an advanced model. The group has recently been dealing with working time policy, and its report was discussed on 22 May 2000 within the benchmarking working group.

According to the experts' report, working time policy plays an important role in the reform of the labour market, but is more likely to be a supplement to other policies than a substitute for further reforms in other areas. Working time policy pursues at least two aims: a reduction of unemployment; and an improvement of the standard and quality of life for employees. The four social scientists emphasise that flexibility of working time promotes both effects. On the one hand, flexibility is a way for employers to increase efficiency and promote better work organisation which can not only save but also create jobs; on the other hand, it can be used to meet the preferences of employees and indirectly lead to a better distribution of the volume of work, which might improve employment opportunities for women.

The report adds the qualification that working time policy cannot replace the importance of economic growth and that consequently working time reforms should not become a barrier to economic growth and employment. To meet these conditions, the group draw attention to four points:

  • regulations on working time should not negatively influence investment activity in businesses. Therefore changes in working time have to be carried out without incurring costs, and should not lead to a reduction of business operating hours;
  • changes in working time should not create skill shortages. There should be adequate planning stages and the whole process should be accompanied by adequate qualification measures. New regulations on working time should be reversible;
  • consumption levels should not be negatively influenced by working time regulations. However, it should be borne in mind that positive effects on employment through working time changes can increase levels of private consumer spending; and
  • long-term effects on wage developments have to be avoided. Working time measures should be synchronised with the time preferences of employees and with company demands, otherwise unwanted side-effects might occur, such as overtime work or pressure on wages. The national Alliance for Jobs could prevent these effects with a medium-term wage policy.

The report states that working time policy has its limits at a time when the common trend is towards work situations where wages are oriented to the outcome of work and there is no regulation or control of working time. The increase in unpaid and non-registered overtime work proves that this trend is real.

The social scientists examined a number of specific working time arrangements, as follows.

Working time accounts

The experts' report distinguishes between short-term working time accounts and long-term working time accounts. While short-term accounts are currently relatively widespread because they can equalise fluctuations in production activity, long-term accounts (which can be used for sabbaticals, childcare, further education or even early retirement) are not that common. The group points to both forms of account as a means for both preserving and creating employment.

Working time policy as an investment

The combination of working time policy with further training and education is seen as a form of investment. As existing qualifications lose their value through structural economic change and its effects on the workplace, the report emphasises the importance of lifelong education, which can be realised through new working time arrangements. Denmark is referred to, as the first country which practises job-rotation in order to accommodate further training.

Part-time work

Part-time work is seen as an opportunity to increase flexibility for both employers and employees. Furthermore. it opens opportunities (especially for women) to enter employment and to reconcile work and family. The report refers to the Netherlands, where part-time work is not necessarily seen as marginal work and where a reduced number of working hours does not have negative effects on pension entitlement, as it does in Germany, and the retirement pension scheme provides a fundamental financial basis. The report emphasises that the Netherlands has been able to pursue only moderate net pay increases without lowering the income of households which may have one and a half incomes at their disposal. Compared with other Organisation for Economic Cooperation and Development (OECD) countries, the level of part-time working in Germany is low. However, surveys show that many full-time workers are prepared to reduce their working time. This does not mean that these workers want to work short part-time hours but that additional working time schemes, such as working about 70%-80% of normal hours, might meet the interests of employees.

In order to promote part-time work, it is seen as important that employees who switch to part-time work are guaranteed that they can return to a full-time job. Furthermore, flexible part-time regulations require a better support system, in the form of childcare facilities and social services for elderly people. The existing care system is still a barrier for women (and men) to work in part-time jobs which do not involve working only in the mornings. In addition, the existing tax system which supports the concept of the single family "bread-winner" by imposing full taxes on a second working person in a partnership, has to be changed.

Partial retirement and working life

The group points out that working time accounts open opportunities to shorten an employee's working life and to allow a early retirement. The report sees this system as preferable to a general reduction of working life through general early retirement, as suggested by the IG Metall metalworkers' trade union (DE9910217F). The group rejects a general reduction of the length of working life, arguing that this would burden the younger generation with all the costs and that demographic developments indicate an increase in the future number of pensioners. Instead further regulations for partial retirement, which are seen as more flexible, would allow the transfer of knowledge between older and younger employees and could be more easily revised when demographic developments change.

As a positive example, the group refers to Volkswagen AG and its early retirement scheme. which is regulated by a system of "time vouchers" (Zeit-Wertpapiere), based on a company agreement and works agreement. This scheme allows employees to invest parts of their gross income, payments for extra shifts, additional payments, extra holidays and overtime work in a special fund (which is professionally controlled and covered against loss of value) which can be used at their own discretion. From the age of 55 upwards, employees can exchange their time vouchers for periods of time off.

Shaping the working week

The report states that a general reduction of the working week to reduce unemployment is highly controversial. The experts point to the reduction of working time in France during the 1980s which, in their eyes, proved that a statutory reduction of working time is limited by the interests of employees on the one hand, and by the opportunities for firms to develop adequate personnel planning within their organisational and economical constraints on the other hand. In most cases, reductions of working time have been linked to an increase in flexibility, which seems to be important to firms to adapt staffing to changes in production. The report argues that a reduction of working time might lead to an intensification of work and that this might lead to disadvantages for employees. Therefore, it is important to improve the acceptance of flexible working times among employees and their representatives. This is usually the case when flexibility is used as a means to save jobs.

Commentary

It is impossible to predict the importance of the experts' report for forthcoming collective bargaining and for the political process within the Alliance for Jobs. There has so far been no public debate on the report and the first discussions on the document within the Alliance indicate that neither the group's analysis nor its proposals deeply move the social partners, unlike a recent report on a subsidised low-wage sector (DE0005260F). This is not surprising, because the report supports not only the opinions of the Confederation of German Employers' Associations (Bundesvereinigung der deutschen Arbeitgeberverbände, BDA) and the German Federation of Trade Unions (Deutscher Gewerkschaftsbund, DGB), but also the outcomes of recent bargaining (DE0004255F). In a joint statement made in the context of the Alliance for Jobs on 6 July 1999, BDA and DGB stated that they supported flexible working time, the creation of part-time jobs, partial retirement and working time accounts (DE9907219F). At present, it seems that there is no lobby for a general reduction of working time in order to redistribute the volume of work and thereby get unemployed people back into work. Although the expert group's report itself has not prompted a discussion yet, each aspect has been discussed in different contexts, and especially several trade unions and researchers have raised the questions of for whom flexibility is required at work - employers only or employees as well - and of who guarantees the employee's social security cover. Part-time work, for example, might become a crucial point within the Alliance for Jobs if DGB proposes a legal entitlement to work part time. (Alexandra Scheele, Institute for Economic and Social Research, WSI)

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