Reduction of working time is key issue

In recent months, the reduction of working time has moved to the top of the industrial relations agenda in Greece, prompted by growing debate over its effects on the problem of unemployment and the need to boost employment and competitiveness. We review the positions of trade unions and employers.

In the framework of negotiations for the two-year National General Collective Agreement covering the years 1996 and 1997, the GSEE (Greek General Confederation of Labour) trade union confederation placed on the agenda of discussions with the employers its demand for the reduction of weekly working hours to 35 without a reduction in pay. The negotiations led to the creation of a working party of technical experts from both sides of industry to study the issue and its effects on employment and competitiveness.

Historically, working time has generally been regulated by law in Greece. However, since 1975, regulation by collective agreement and arbitration procedures has become widespread. In 1983, Decision 25/1983 of the Athens Second-Instance Administrative Arbitration Tribunal fixed weekly working time at 40 hours and introduced the five-day week for the first time, but covering only manufacturing industry. The National General Collective Agreement of 1984 extended these regulations to all employees across the private sector. Today, both employers and employees are speculating long and hard about whether there is a need for a further reduction in working time.

Unions back 35-hour week

On the trade union side, GSEE considers the reduction of working time as essential to deal effectively with the problem of unemployment and to improve the quality of working life. To substantiate this position, the confederation's research and training arm, the Institute of Labour (INE-GSEE) has completed a study entitled The reduction of working time, which supports GSEE' s demand for the introduction of a 35-hour week without a reduction in pay.

The INE-GSEE study, which lays out a preliminary analysis of the matter, concludes that the reduction of working time on full pay can be successfully introduced in Greece without threatening competitiveness. This conclusion is based on a quantitative analysis of the performance of the Greek economy and an analysis of experience from other EU countries.

The most important finding, however, is that the introduction of the proposed 35-hour week measure has to be carried out under certain specific conditions which will enable it to create new jobs and increased competitiveness.

The study concludes that the 35-hour week will create 10% more jobs and secure existing ones across the private sector, whether or not it requires reorganisation of the production processes involved. Its impact on labour costs will therefore be favourable. However, the accomplishment of this goal assumes an increase in the geographical and occupational mobility of the labour force. If not, the increase in employment will be smaller, while skill shortages are likely to appear in local labour markets leading to increases in pay.

Another essential precondition is for the immediate and full implementation of reductions in working time because gradual reductions (for example, small annual decreases of an hour at a time) allow enterprises to reorganise production in such a way as to avoid recruiting more employees.

The study stresses furthermore that the 35-hour week can be introduced at once, without threatening competitiveness, into those enterprises in capital-intensive sectors that have reduced wage costs to a small proportion of total costs (such as the food industry), as well as into those enterprises and sectors characterised by high rates of profitability (as in banking). Hence it maintains that any possible costs resulting from the reduction of working time without a reduction in pay can be easily absorbed by likely increases in productivity and by the reduction in the cost of unemployment benefit, since unemployment will be cut considerably.

Finally, the report states that proposed measure is bound to have major implications for the conduct of industrial relations, since a decrease in unemployment and an increase in employment will put an end to compulsory overtime and limit the availability of overtime work.

Employers question effects of hours cuts

On the employers' side, SEV (the Federation of Greek Industries) and the other employer organisations in Greece, oppose GSEE' s demand for a 35-hour week on full pay. A study carried out by the Foundation for Economic and Industrial Research, entitled The effects of the reduction of contractual working time, contains SEV 's counter-arguments. This study reaches the conclusion that the reduction of working time does not generally produce an increase in employment and even in those cases where there is a slight increase, the impact on production, exports and investment is particularly negative. Furthermore, the study concludes that even if pay remains constant, the reduction of working time will have a negative effect on real income, as it leads to an increase in inflation and negative effects on the balance of payments and the public deficit.

In comparative terms, the study underlines experiences from other EU countries claiming that the effects of hours reductions have been more negative than positive, as they were too in Greece over the years 1979-82, a period of considerable reduction in contractual working time. As far as labour costs are concerned, the reduction of weekly working time, without overtime, increases the hourly cost per employee, whilst when overtime is added in, the costs are even higher. Similar increases are recorded in labour costs per unit, which have led to a decrease in competitiveness. In conclusion, the study maintains that reducing weekly contractual working time bears a significant cost both for the economy as a whole and for individual enterprises. Furthermore, the burden on enterprises is likely to be heavier than that resulting from possible increases in direct labour costs, because reductions in working time force enterprises to restructure at a significant additional cost

Commentary

Reductions in working time have historically been followed by pay rises by way of compensation for increases in productivity. So, in view of the employers' insistence on a reduction in labour costs, union demands for a reduction in working time without a reduction in pay are not regarded favourably. This is the context in which the social dialogue between employers and unions is currently taking place. However, given the strongly-held views on both sides, as expressed in the studies outlined above, any sort of compromise will apparently be difficult to reach. (Eva Soumeli, INE-GSEE)

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