Home > Economics - General > A quick post for a long break

A quick post for a long break

July 1st, 2011

When my wife sent me the link, this ABC story was headlined Treasury head says Australians must work harder. It’s now been changed to “Australians must increase productivity: Treasury head”, which sounds a bit more reasonable, but I think is still a somewhat problematic.

I’ll try to discuss this in detail later, but for now I just want to push a point I’ve been making for a long time, which came up in comments recently. If governments want a simple reform that would improve our economic performance (though maybe not the standard measures of that performance), one of the best things they could do is legislate for six weeks annual leave as a standard employment condition. We have parental leave for parents of new babies, but there’s an equally big problem for parents of school age children trying to deal with the mismatch between school holidays (six weeks over summer, as well as term breaks) and the measly four weeks they are allowed, unchanged since the Whitlam government. And the rest of us could do with more of a break as well.

An extra week’s leave is like a 2 per cent wage increase. If annual leave were increased in a couple of stages to six weeks a year, it would only be necessary to find productivity increases or other offsets of 2 per cent, and, as Martin Parkinson implies, that shouldn’t be too hard.

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  1. July 1st, 2011 at 21:53 | #1

    It’s not just the breeders, John :)

    I would greatly appreciate the chance to take more time off, and would gladly trade it off against increased salary.

    Theoretically, I have the option to do so; I don’t know too many academics, particularly young academics without tenure, who seriously consider it.

  2. boconnor
    July 1st, 2011 at 22:09 | #2

    If the goal is to lessen the mismatch then the 6 week idea is great.

    Even better would be no difference between the cumulative school breaks over the year and employment annual leave. The present mismatch reduces household income as carers either pay for care during school breaks or one carer (usually female) takes time off from work, or opts for part-time work. Employment participation rates, particularly for women, would rise, which would be a nice productivity boost. Assuming some compromise of reduced school breaks and longer general annual leave to get a match, it would mean more money for teachers as compensation but presumably the productivity boost easily covers the cost.

  3. John Quiggin
    July 2nd, 2011 at 05:00 | #3

    Robert, I updated to mention this point, which certainly applies to me :-) .

  4. Ikonoclast
    July 2nd, 2011 at 08:32 | #4

    I agree with JQs thoughts. Surely, in addition, overall productivity of the nation would be improved by a large reduction in unemployment and under-employment? Policies of the last two decades have failed to solve the unemployment and under-employment problem. Instead, the definition of full employment or at least tolerable unemployment has been subtly moved in general discourse from 2% unemployed to 5% unemployed. Furthermore, the ABS are forced to cook the books with misleading statistics so that this 5% is false and the true un-under-employment figure is more like 8% to 10%. (Sorry, I cant check the stats at the moment as the Centre of Full Employment and Equity site is down.)

    Since policies for the last two decades have failed to address unemployment, why do both parties persist with them? Our country seems to be in a failed policy loop (witness unemployment and inaction on carbon emissions) where we are incapable of abandoning policies which clearly and continually fail and incapable of developing or re-discovering policies which actually work. Why is this? What is causing the strange paralysis and stasis of modern policy in this permanent failed mode?

  5. BilB
    July 2nd, 2011 at 09:22 | #5

    Well, JQ, you’ve got non to Buckley’s chance of getting that one past the post. The reality is that business wants to run 24/7/365. I ran my business in NZ as 4 day 36 hour total flexitime no public holidays, and that worked well. This suited a lot of people, particularly students and people with medical issues. I’m the only one who worked 14/7/365, but then it was my business.

    Through the years I have always preferred part time work, or afternoon shift. This allowed me to earn some money, no matter how meager, and develop my own ideas along the way.

    There are other ways for business and people to work together. But at the end of the day the most important issue is, do people earn enough to live fulfilling lives. The people who work with and for me do so as a process on their way to some where else that they prefer to be but which “establishment” does not allow them to progress. Self determination is the best motivator (apart from hunger) and that is some thing that should be built into the system. So I get annoyed when people start criticising part time, or flexible employment.

    An example of where inflexibility entrenches unemployment is with the long term unemployed. These poeple completely change their lives to suit that way of being filling in all of their time with “activities” (including excessive sleep). So it is very difficult for those people to break out of that mould dirrectly to full time work. A concept that the Pacific Party proposed was a schem dubbed the registered shared job. This is where 2 long term unemployed people team together to in a “buddy” system to fill one job. The employer gets a tax break for their trouble. The 2 people work out a roster to fill the job and check on each other to make sure that the employers needs are met. Does it work? It was never tried. But I found with my employment policy that there are a lot of motivated people who need time to : attend courses; attend to family; obtain regular medical treatment; work on personal projects; fill a varied lifestyle; etc.

    Work choices was a dog, but so also is the total compulsory union package.

  6. Tim Dymond
    July 2nd, 2011 at 10:03 | #6

    At the risk of blaming the media for something again – that original headline points to the completely cock-eyed view of what constitutes ‘productivity’ among our great opinion leaders and makers. I despair at the number of times an increase in working hours is reported as a ‘productivity trade-off’ for a pay increase.

  7. July 2nd, 2011 at 11:51 | #7

    I noted that story when it had the old headline. How offensive!

    A pet hate is the weasel-wordification of the word “reform”.

    Whatever is proposed when that word is used, it is virtually never something which accords with the dictionary definition.

    The word they should use is “change”, as usually all that is proposed is a change (again, almost invariably for the worse!).

  8. Ikonoclast
    July 2nd, 2011 at 12:13 | #8

    The word they should use is “regression” as in regressing to an earlier set of conditions less favourable to workers.

  9. CJ
    July 2nd, 2011 at 13:49 | #9

    When my public service department said they could not index our pay to CPI because of ‘budget constraints’ I suggested a cut in standard hours. This was greeted with guffaws and the comment, ‘Don’t be ridiculous!’ As it is, we all work significant amounts of unpaid overtime anyway, so a cut in official hours would not have amounted to anything meaningful.

    On a related point, the media frequently publishes glowing appraisals of individuals who have an ‘amazing work ethic’. This is usually demonstrated by examples of the person getting up at 4.30am, so they can start work at 7.00 and continue without a break until midnight. Personally, I think there is something screwy about such values. I have no problem with people getting up early and working hard, but I’d be more impressed if that time went into personal interests, family, and enjoyment of life.

    In Australia, we work too hard and we glorify this too much.

  10. Freelander
    July 2nd, 2011 at 20:07 | #10

    @CJ

    I suggest next time you go shopping try grabbing something and telling the shopkeeper “I’m sorry but I cannot pay that price due to budget constraints” and see how successful you are. The battering down of wages is due to globalisation and the destruction of, and sell-out by unions. You will find that there won’t be any budget constraints for those on higher grades, or for certain ‘star’ performers. The argument will be that they need to pay them ‘market rates’ to stay ‘competitive’. Although those who are paid the great rates are those in areas that are not competitive and that is one of the reasons why they are paid extra.

  11. optimist
    July 2nd, 2011 at 23:01 | #11

    Hear hear,
    I once looked at the ABS use of time statistics and split them into activities I considered “productive” – as in adding value to our lives or other peoples. Our unpaid productivity as a nation is as great as our paid productivity if you measure it in hours spent (I know there are problems with that but happy for you economists to provide better measures). Parenting, caring, chores, volunteering etc all add to our well being. The sooner we incentivise the paid economy to value worker flexibility and time off the better.

  12. Freelander
    July 2nd, 2011 at 23:24 | #12

    Another mistake you often hear made is to categorise housing as ‘unproductive’ in comparison with other capital investment.

  13. PSC
    July 3rd, 2011 at 13:44 | #13

    If the problem is an imbalance between the school year and working year, surely we would do just as well to reduce the school holidays to 4 weeks of the year.

  14. Newy Stats
    July 3rd, 2011 at 15:06 | #14

    This raised an interesting question for me. Would these parents be counted as underemployed and should they be counted?
    I guess they would answer the question “would you like to work more hours?” with “Yes, but someone needs to look after the kids”. Would this become a “yes” or a “no”. The other likely answer is “No, I’m looking after the kids”, which should get coded to “no” & thus not underemployed. Where in the spectrum does the ABS train it’s labour force surveyors to draw the line and where should it be drawn?

  15. July 4th, 2011 at 14:51 | #15

    Anybody who wants an extra Two weeks off per year can just take unpaid leave.
    What is the problem?

  16. Ikonoclast
    July 4th, 2011 at 16:12 | #16

    @Steve at the Pub

    In some cases that might work if the employer is willing to grant that leave within operational requirements. Some work places allow 8 weeks annual leave if the worker is willing to sign up to take a 48/52 fraction of their standard pay each fortnight. This can work out reasonably well as it can reduce tax.

    Why not make this flexibility standard in the workplace and allow 4 week , 6 week and 8 week holiday emplyment conditions with the appropriate fraction of fortnightly pay?

    I would prefer to see real pay rises (and even the rises to match CPI which are not rises in real pay of course) given to workers as standard monetary remuneration. Then this can bargained off individually and secondarily for other conditons (not basic conditions) if worker and employer agree without duress to either party.

  17. JoeG
    July 5th, 2011 at 08:34 | #17

    The problem, Steve, is that if you take unpaid leave, your work is either done by your colleagues or left for you when you get back. Result, same amount of work done, boss is richer. The other problem is that unpaid leave is at the discretion of the boss, even more than ordinary leave.

  18. July 5th, 2011 at 13:12 | #18

    JoeG, I don’t see how that unpaid leave scenario differs from a paid leave scenario.
    Are you making a case for nobody ever going on leave?

  19. Freelander
    July 6th, 2011 at 04:57 | #19

    @Steve at the Pub

    As you don’t see the difference, how about I work for you and go on paid leave permanently? I would appreciate your regular contributions to my bank account and you wouldn’t see the difference. I call that a Pareto improvement.

  20. July 6th, 2011 at 11:22 | #20

    @ Freelander:
    Presumably there’d be no difference in the amount of work you did.

  21. Freelander
    July 6th, 2011 at 12:06 | #21

    @Steve at the Pub

    Wouldn’t matter because you have already indicated that you are unable to tell the difference.

  22. July 6th, 2011 at 23:00 | #22

    @ Freelander

    Paid or unpaid, if you get paid what you are worth, then neither would there be any difference to my pocketbook.

  23. Freelander
    July 7th, 2011 at 19:44 | #23

    Or at least you wouldn’t notice the difference. But I think I would when your cheques start to bounce.

  24. July 7th, 2011 at 20:35 | #24

    If paid what you’re worth, you’d not be receiving cheques.

  25. Freelander
    July 8th, 2011 at 00:50 | #25

    Steve. Don’t drive home. Think of others. Take a cab.

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