Labour Day

Today is Labour Day in Queensland, held to mark May Day. In most other Australian states, though, Labour Day commemorates the passage of legislation in the mid-19th century limiting the working day to eight hours. This was the first step in a series of legislative measures and agreements negotiated by unions that steadily reduced the number of hours standardly worked per year from about 2400 in 1950 to around 1750 in the mid-1980s.

As we all know, that trend came to an abrupt halt and went into reverse through the 1990s. Strictly speaking, standard hours have not changed, but the majority of full-time workers now work longer-than-standard hours, typically without paid overtime. Similar trends have been evident in other English-speaking countries, most notably the US.

Meanwhile working hours have continued to decline in Europe. The imposition of a maximum 35 hour week in France has attracted most attention, but few Europeans work more than 1600 hours a year.

Is the return of longer hours a desirable market outcome or an aberration. In my view, it’s the latter. the intensification of work in the 1990s seems to be the product of a period of economic expansion combined with employer dominance. Working hours have already begun to decline in the United States.
The experience of Japan, famous for long working hours in the 1980s is instructive. The low growth of the last decade has not been accompanied, as one might expect, by strong growth in unemployment, even though productivity has continued to improve. This is because working hours have declined. As this ILO data shows, average working hours in Japan are now slightly below those in Australia and well below those of the US.

Intuition suggests that leisure is a normal good. Economic progress should entail shorter hours and less stress. Instead, for the last decade or so, we have had the opposite. Productivity gains derived from such sources are built on sand (in fact, correctly measured, they are nonexistent).

6 thoughts on “Labour Day

  1. Big yeah, Quiggers! Our lives are being stolen. Quoth John Stuart Mill nearly two centuries back: “It is questionable if all the mechanical inventions yet made have lightened the day’s toil of any human being”. Marx quoted him, too (*K*1 chapter 15, paragraph 1). Reckon time was pretty central to Marx’s thinking, meself.

    Reckon he was profoundly right in this, too.

  2. PS: I notice Dubya is obviating this annual reminder to workers that their lives are being increasingly pilfered by renaming it ‘Loyalty Day’.

    PPS: And congrats on the move. Nice place you got here.

  3. i work in a bank HR dept in the city (your city) and the HR line is pretty hard-line “let the managers manage” type. This leads to most of the workforce being on individual contracts and annualised salaries (and so people work routinely 45+ hours a week, in fact the STANDRAD yearly hours is 1950). I dislike it, and think it unfair but, spread across the country, this sort of thinking appears to supported an economy that has not faltered when many others (I’m told) have.

    If your view of economics is to make sense and not just seem an academic whinge, how can the government and corporate economists adhere to a very different view of labour and appear to be getting it right?

  4. I don’t think the length of the macroeconomic expansion has anything much to do with micro policies. NZ had very similar micro reforms and much worse macro performance until the last few years when (perhaps coincidentally) the reforms have been partially reversed.

    Similarly, the length of the US expansion in the 90s was quoted as evidence of the benefits of flexible labour markets, but they are now into the third year of recession/stagnation.

  5. “…how can the government and corporate economists adhere to a very different view of labour and appear to be getting it right?”

    Long time followers will know I have a thing about Professor Kim Swales’ ideas for an approach to unemployment piggybacking on GST. They may not know I did some independent research before I got there; I come from the direction of games theory and externalities, which makes the approach a Pigovian one.

    IF we have externalities, well, that would be just precisely why the government and corporate economists appear to be getting it right – they are doing the most sensible thing within a flawed set up, only without once looking at the flaws in the set up and trying to fix them. Some economists ARE looking, but that isn’t a problem for these economists, so it’s just not on the agenda they’ve been given – which is what an externality would do.

    I was put on the trail by noticing just this oddity of over-employment and unemployment co-existing simultaneously. It suggested – not proved – the possibility of a phase change mechanism so two different things could be going on at once. Since those happen when some underlying curve reverses its slope, I went looking for a possible mechanism when things start working backwards. I found one in the “Tragedy of the Commons”, and went on from there. I still don’t have the empirical data to determine whether that really does work though as a phase change, though. (Paper, anyone?)

    For further details, look at my publications page at http://users.netlink.com.au/~peterl/publicns.html

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