Report on 40-Hour Week

Meeting report

LABOUR PORTFOLIO COMMITTEE
1 NOVEMBER 2000
REPORT ON 40-HOUR WEEK
 

Towards a 40 hour work week - Report [this is a zipped file]
Towards a 40 hour week - Summary

SUMMARY
The Labour Department has produced a report on the feasibility of cutting the 45-hour working week to 40 hours. This is in line with Schedule One of the Basic Conditions of Employment Act which compels the department to investigate how the reduction to a 40 hour working week may be achieved.

The report finds several preconditions necessary before such a move can be achieved:
- reduction in pay disparities and poverty
- increased skill levels
- improved public transport and reduced crime
- improved job security.

Some committee members accused the department of shying away from introducing a reduced working week.

MINUTES
Ms Lisa Seftel, Chief Director of Labor Relations in the Department of Labour, told the Committee that the move to a forty hour week has legal standing, the major debate was whether it will improve the efficiency of the economy. The 40-hour week is being investigated thoroughly and there is extensive international experience from which to draw. She summarised the issues that are presented in the report commissioned by the Department entitled "Towards a 40 hour work week":

Normal hours of work range from:
38 on average in Australia
54 per week in Thailand (for commercial work)
40 hour week is norm in 42 countries
48 hour week is norm in 48 countries
44 hour week is norm in 17 countries

Reasons for reduction
- Employment creation is the main reason for reduction in Europe.
- Allows for a better combination of work and private life.
- Accommodate increasing female participation

Instruments used to reduce hours:
Legislation - France provided a recent example of national legislation being used to achieve working time reductions. On 1 February 2000, legislation introducing the 35-hour week came into force, implying a reduction of three hours on the previous 38-hour maximum.
Award systems - In Australia the system operates through state tribunals who perform arbitration - like awards, which cover all workplaces. The awards are legally binding and determine wages as well as other conditions of work. Employers and workers can bargain outside the system, but the award arbitration system underpins the further negotiations.
Tripartite agreements - In Spain working time reductions are achieved through tripartite agreements, which involve government, employers and workers. National legislation sets the floor for overtime hours and pay and so provides the framework within which the agreements are struck.
National collective agreements - In Denmark national collective bargaining has been used to implement reductions in working hours. A 37 hour week applies to all workers rather than having variations between sectors as in many other European countries. Germany, Belgium and the Netherlands also utilize collective bargaining. The bargaining occurs at branch level and usually covers non-organized as well as organized workers.
Company agreements - In the United Kingdom company agreements have been the primary instrument through which working time reductions have been achieved. A weakness of this approach is that individual companies find it difficult to change conditions significantly when they are in competition with other companies who are not taking similar steps.

Trade- offs
Ms Seftel said trade-offs were negotiated rather than imposed in places where unions were strong. Workers were assured that reduction of working hours per week would not affect their income. Reduced wages often traded off with:
- Averaging of hours over longer periods
- Flexible distribution of hours over week, month, year
- Extension of operating hours
- Reduction of costs of flexibility e.g. weekend work without a premium.

Method of working time reduction
- Incremental decreases in daily or weekly working hours (e.g. early closing on Fridays)
- Measuring hours throughout working life
- Early retirement schemes
- Temporary absences: parental and educational leave, sabbaticals.
- Phased entry into education and training

Impact of working time reduction
- Difficult to isolate impact from other macro and micro economic changes
- Impact can be positive or negative depending on number of factors.
- Look at impact in relation to: actual reduction of hours, employment, efficiency, inequality, social benefits.

Impact: Actual hours
- If actual hours do not decrease, working time reductions translate simply into a wage increase and there is no impact on employment or efficiency.
- Actual hours are less likely to decrease where wages are low or there are high wage differentials and workers require the extra wage.
- There is a suggestion that there should be reduction of rest periods e.g. tea breaks
- Elimination of training periods, training to be made after working hours.

Impact: Employment creation
It is not yet clear as to whether employment creation can be improved. The number of jobs may be increased but levels of unemployment may not be affected. A reduction in working time could take the form of more part-time opportunities, encouraging more women to enter the labour market. Employment therefore increases, but unemployment is not affected significantly.

Positive effects are more evident when reductions are not associated with:
- Increase in unit costs
- Bottlenecks in respect of available skilled labor
- Significant fixed costs per employee
- High wage differentials and low wages
Job sharing has had mixed results

Impact: Economic and operational efficiency
Experience mixed and difficult to attribute improved efficiency to a single factor.
Working time reductions can provide an incentive to modernize work and consequent improvement in competition
Germany and the Netherlands experienced improved competitiveness, Norway not.

Impact: Inequality
- Reductions can affect the size, structure and composition of labor force, which can promote equality or cause further inequality.
- Can increase female participation in workforce as well as numbers of part time and temporary workers.
- Women tend to be part time or temporary and therefore wage inequality between men and women can increase.
- To reduce inequality of hours worked by men and women, need to be accompanied by appropriate policies on child care, school hours, transport, etc

Impact: Social benefits
- Survey evidence shows that workers prefer shorter hours. 63% of USA workers in 1998 said they wanted to work fewer hours.
- Can reduce stress and fatigue and give more time for family and leisure.
- Can have positive impact in the workplace by reducing absenteeism and turnover and relieving the tension between work and home-related duties.
- Employees can remain dissatisfied if reduction comes with flexibility that inconveniences workers.

Impact: Health and safety
- Reduction of hours can relieve stress and fatigue
- However this benefit may not be realized if accompanied by arrangements such as averaging which involves long hours per day.

Actual hours in S.A.
- Average working hours per week is 44, 85
- African men work the longest number of hours: 48,1
- White females work the shortest number of hours 41,1
- Agricultural workers work the longest number of hours, followed by mining.

Traveling time
- Significant in South African context
- Mean traveling time for African workers is 48 minutes compared to the 32 for white and 37 for Indians.
- 15% travel for more than one and half-hours on a one way journey.
- No difference between rural and urban workers (42,9 for rural and 43,2 for urban)

Reduction to 40 ordinary hours of work per week
Sectors at 40 ordinary hours of work per week:
- Car manufacture
- Building and construction (Gauteng and Northern Province)
- Some parts of leather
- Nursing
- Banking
- Parts of public sector

Sectors moving towards a 40 hour hours of work per week
- Chemical
- Clothing and textile
- Some parts of leather
- Mining
- Retail
- Steel and engineering
- Transport

Reasons for reductions
Unions primarily motivating for a reduction for these reasons:
- Workers need to rest and recuperate and be with their families
- Reduces stress and improve health so as to increase productivity
- Create or save jobs

Instruments
- Bargaining councils and other collective agreements: primary means
- Company agreements have provided further improvements
- Required significant union pressure

Conclusions
International experience instructive
Local experience still limited
Therefore tried to identify:
Preconditions in South Africa that would need to exist to ensure the beneficial reduction of hours to 40 per week.
Conditions under which a 40-hour week can most favorably be implemented.
Tentative conclusions require discussion and more local experience to draw on.

Discussion
Mr Ndou (ANC) asked if it is possible for the Department to take responsibility for transport to and from work for employees? He thought that organization of work and related issues are the responsibility of the employers. Further it did not make sense to him that workers were supposed to train after work. They would definitely be tired then.

Mr Ramodike (UDM) said it appears that there is no consideration of the families of migrant workers. What is the provision for such workers and their families? On the reduction of hours, he asked how one circumvents this in view of the lack of jobs in this country.

Ms Seftel replied that transport is a very serious issue. It is difficult for workers to go home in the middle of the night if they are closing late. Due to South Africa's history, there is the problem that Blacks, who constitute the majority of the workforce, have been put far away from workplaces because of the Group Areas Act.

On the question of working and training times, Ms Seftel said that this is a bargaining issue between unions and employers in a particular workplace. The Department cannot impose any decision on this matter.

On the question of migrant workers and their families Ms Seftel said this is an important question and is currently being investigated thoroughly by the Department. She said the reduction of working hours is aimed also at giving these migrant workers enough time to go home and stay with their families at certain periods.

Advocate Madasa (ACDP) pointed out that the presentation document refers to the examples as international but they are European, not international.

Mr Heine (DP) said the United States has the strongest economy in the world and at the same time they have the lowest unemployment rate in the world. What is their strategy?

Ms Seftel replied that the Minister sees the report as part of a public debate. The report is seen as a means of sparking more informed debate on the issues. The workers and employers will need to go into the bargaining chamber to discuss this.

In answer to Adv Madasa, Ms Seftel said that the average working hours in developing countries is 48 hours per week. Therefore no experience can be drawn from them. On the question of the United States Ms Seftel said that she could not speculate as to its strategy. However, the US has its labour laws like other countries.

Mr.Manie (ANC) said the report seems to give background instead of giving guidelines. The government has to guide and take a stand on what is to be done so that we ensure how the economy can grow faster.

Mr Durandt (NNP) said we as government have to play a fair role between the employer and the workers. The Committee should not push the Department of Labor in a certain direction.

Mr Oliphant (ANC) said the government must be involved - they must not shy away from responsibility. He asked what is the government is trying to tell them in terms of this report?

Mr Ndou (ANC) thought that the report lacked certain aspects and Mr Oliphant had touched on this. It should state "that from 1994 to 1999 this or that has been achieved in South Africa". There is a history in South Africa which needs to be mentioned as well.

Mr Oliphant (ANC) reiterated that the government should intervene. He asked what would happen to the trend towards casualization.

Ms Seftel said within six months there should be a sectoral approach where every stakeholder will be engaged on a sectoral level.

An ANC committee member asked how does one implement the recommendations in the report?

Ms Seftel said the report would be distributed to trade unions, Nedlac and employers so that they can make their submissions

In conclusion Mr Manie said there is no straightforward solution: there is a responsibility to protect our workers and ensure that we obtain our main objective, that of economic growth. The information has been gathered in this report to assist in this process..