Now is the best time for a reduction in working hours

Now is the best time for a reduction in working hours

by Markus Marterbauer and Sybille Pirklbauer

[This article posted on August 23, 2023 is translated from the German on the Internet, https://www.awblog.at/Arbeit/jetzt-ist-der-beste-zeitpunkt-fuer-arbeitszeitverkuerzung.]

The Austrian Industrialists' Association and the Austrian Federal Economic Chamber claim that a labor shortage makes a reduction in working hours impossible. But we cannot remember that these two institutions would have offered a reduction in working hours when unemployment was low. In fact, the emerging labor shortage is shifting the balance of power in such a way that a reduction in working hours becomes possible. Innovative companies have long recognized this. Shorter working hours are necessary anyway: the pressure at work is enormous and comes at the expense of health. And they correspond to the wishes of employees.

Productivity and workload are increasing, but statutory working hours remain unchanged.

The legal definition of full-time work dates from 1975 and is thus almost 50 years old. The world has changed dramatically since then: where people used to type on a typewriter and send letters by post, digital exchanges now take place in real time. Where products used to be put together piece by piece by hand, highly automated manufacturing processes now run. Where there used to be time to take good care of patients or customers, there is now pure stress. Productivity per hour worked has doubled since the mid-1970s. In service occupations, such as nursing, work intensification and time pressure have increased enormously as well. But the statutory normal working hours have not changed for almost 50 years (beyond an extension of the statutory holiday entitlement).

According to the Working Climate Index of the AK Oberösterreich (AKI), one in three employees – around one million employees – cannot imagine working in their current job until they reach retirement age, with work pressure and excessive working hours being key factors. The AKI data also show that 27 percent of employees feel severely or very severely burdened by constant time pressure. This is more than twice as many as ten years ago.

The wishes: overall shorter working hours, part-time employees want to top up

The 2019 labor force survey provides insights into the hours normally worked and the hours desired by employees. On average, employees worked 36.1 hours per week. Almost one million, and thus about a quarter of all employees, worked less than 30 hours, almost two million worked between 35 and 40 hours, and about 700,000 worked more than 40 hours.

The desired working hours are quite clearly distributed: employees with an hours total of 30 hours or less want to increase their working hours on average, while those with more than 30 hours want to reduce them. About a quarter of part-time employees want to increase their working hours immediately, while about a quarter of full-time employees want to reduce them immediately. The desired working hours are on average 34.9 hours per week, so the desired reduction in working hours is on average 1.2 hours.

This finding is also confirmed by a recent evaluation of the working climate index: since 2000, the proportion of employees who want to work fewer hours has risen significantly to 28 percent. Contrary to public debate, the desire for fewer working hours is not more pronounced among the younger generation than in other age groups.

An online survey by AK Wien also revealed that the desire for shorter working hours cuts across all sectors and that a shorter, healthy full-time position would go a long way towards a fairer distribution of paid employment between women and men. With a 30-hour week, not only those with longer working hours (mostly men) would reduce their hours, but half of the part-time employees (mostly women) would increase their hours. When it comes to how they use the time they gain, both genders rank relaxation and time for the family at the top of their list.

Reality: excessive working hours and unpaid overtime

In Austria, however, we are far from realizing these wishes: the average working hours for full-time employees is 40.8 hours, above the eurozone average of 39.4 hours. This makes Austria one of the countries with the highest number of full-time hours. In comparable economies such as Denmark, the Netherlands and Finland, normal working hours are significantly lower.

And sometimes this work is not even paid for. According to a special evaluation of the labor force survey by Statistik Austria, 47.1 million hours of overtime remained unpaid last year, i.e. the companies did not compensate their employees for them in either money or time. In doing so, the companies withheld 1.2 billion euros from their employees.

It is therefore high time for a modern working time standard that is appropriate for the stresses and strains of working life in the 21st century, in the form of a new and healthy full-time. This is in the range of a 30-to-35-hour week and should also enable sustainable employment until retirement age. The Minister of Labor is called upon to work with the social partners to develop and define steps in this direction.

Innovative companies are leading the way

While the Federation of Austrian Industry and the Austrian Federal Economic Chamber are standing on the brake, modern, innovative companies are overtaking them. They adapt working hours to the needs of employees, making them attractive to workers. While some remain stuck in the past, future-oriented companies recognize that short full-time is also a key to business success.

From marketing companies to electrical installers, from pet food producers to hotel to hairdressers: there are now successful examples of companies with reduced working hours across all sectors and federal states. The online marketing agency eMagnetix was scientifically monitored in detail. In response to a shortage of applicants, the company introduced a 30-hour week with full pay in 2018 and was scientifically supported by the working time research and consulting company XIMES.

The evaluation impressively shows that the 30-hour week has not only increased employee satisfaction, but has also led to economic success for the company. The number of employees rose from 12 to 40 by the end of 2022. The company, based in a small town in Upper Austria, often had no job applications at all despite overpaying under the collective agreement. Now it can choose from up to 100 applications. This is a clear competitive advantage for the company.

Need for action in public services

The public sector will also have to adapt. All too often, rigid working hours prevail here. Employees with particularly demanding jobs, such as in nursing or elementary education, are calling for more time off. Many employees “flee” to other sectors after a few years, even though they are urgently needed.

Although a great deal of progress has been made in the collective agreement “Social Work” with the 37-hour week, more time off and more staff are still urgently needed. They would also be an important measure to make work in these areas more attractive and thus retain skilled workers in the longer term.

More prosperity by implementing the working time wishes

Reducing working hours is an essential factor for a sustainable increase in prosperity and well-being, as the AK prosperity reports have shown for many years.

In addition, WIFO has now calculated the economic effects of the individual working time preferences recorded in the 2019 labor force survey. These are surprisingly low in all the scenarios chosen: adjusting working hours to these individual working hour preferences would mean a reduction of 1.2 hours or 3.3 percent in the average hours worked. It would have positive effects on the labor market and in terms of productivity, as well as slightly negative effects on production and prices. Employment increases by almost 1 to 2 percent and the unemployment rate falls by ½ to 1 ½ percentage points. Hourly productivity increases by between ½ and 1 ½ percent. Consumer prices rise by ½ to 1 percent. Real per capita wages fall by 0.2 to 1 percent in the medium term and production by 0.7 to 0.9 percent.

The reduction of the average working hours from 36.1 hours to 34.9 hours would be the first of three steps towards a 32-hour week. In this sense, a 10 percent reduction in working hours would result in a reduction of real wages by 1/2 to 3 percent and of production by 2 to 3 percent. That sounds like a good deal. More leisure time and higher non-material prosperity through shorter working hours with only a small loss of material prosperity.

Where will the workers come from?

Long working hours cost productivity, a reduction in working hours increases productivity: fewer sick days, fewer accidents, higher concentration at work. This is also confirmed by the new WIFO study, which assumes that around 40 percent of the reduced working hours will be offset by increased productivity.

In addition, there is great potential in the labor market that is not being exploited. There are still 2.4 job seekers for every vacancy. In addition, 438,000 people – almost exclusively women – work part-time due to care obligations, often due to the inadequate framework conditions for childcare and all-day schools. However, a total of 165,000 part-time employees would like to increase their hours, the majority of them by more than five hours – but they are apparently not given the opportunity to do so by their employers.

In addition, there are around 200,000 people who are not registered as unemployed but would be willing to take a job – the so-called “hidden reserve”. Of this group, 140,000 would be available within two weeks.

There would also be enough workers available in the future. A new study by WIFO on behalf of the social partners has calculated that the labor supply in Austria will grow by a total of 176,000 people between 2018 and 2040. With appropriate measures, such as increased (re)integration of mothers or promoting second-chance education, it could be even more.

The largest group of potential employees for good working conditions is made up of the many low-wage earners. According to EU SILC 2021, 520,000 full-time employees earned less than €2,000 gross per month (14 times a year) that year. That is 16 percent of the non-self-employed workforce. The percentage of low-wage earners is especially high in retail, in other professional services and in gastronomy, where it comprises more than half of the employees. Providing low-wage earners with employment relationships with working hours that meet their needs and wages that they can live on offers enormous potential for good employment.

Companies must take more responsibility for training again

Of course, not all people who enjoy working or would like to work more do not already have the necessary skills. Therefore, they must be given the opportunity to acquire the appropriate qualifications. If companies want skilled workers, they must take responsibility for this and once again provide sufficient funds for training and further education. In the last ten years, the share of companies in the financing of further training has fallen dramatically from 41 to 31 percent.

In addition, the public labor market service must be provided with the appropriate financial and human resources, and the mandate for qualification must be given the same priority as placement. A right to professional re-qualification for employees and job seekers according to the AK model of a qualification allowance would also help.

Conclusion

A shortage of labor provides a promising basis for implementing working hours that meet the needs and wishes of employees. For part-time employees, the possibility of longer working hours with good working conditions and a fairer distribution of care work means greater prosperity. Full-time employees need various forms of working time reduction that are tailored to their specific needs. More time out during working life is a prerequisite for retiring later. The best time to reduce working hours is now.

Markus Marterbauer is Federal Minister of Finance. Until March 2025, he was head of the Economic Science and Statistics Department at AK Vienna.

Sybille Pirklbauer is head of the Social Policy Department at AK Vienna.

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