proposed four-day week - extra 25% inflation?

[Financial-Modeller]

Various articles last weekend espousing the utopia of less work time, more leisure time etc following an announcement of a trial by several UK companies whereby salaried employees work a four day week without reduction in pay.

Is the four-day week too good to be true?

We talk to the couple designing a new working pattern and ask whether it’s common sense or pie in the sky...

www.telegraph.co.uk

I expect that if adopted, this will lead to inflation, but a more immediate impact could be pushing more low earners into the support of the benefits system.

Taking a random example of boiler servicing, let's assume that the boiler servicing company has a pipeline of work for statutory and warranty purposes, plus ad-hoc servicing and emergency repairs.
It uses a combination of full-time salaried staff (servicing boilers and non-client-facing), and contractors on a day rate.

The salaried staff move to a four-day week, doing 80% of the work they used to do, so increasing their cost per job, pushing prices up (by 25% in simple terms). Contractors take up the slack but day rates move up in response to their salaried peers.

Meanwhile the cleaners/caterers and other low-skilled roles on hourly rates at the company learn that their five nights of cleaning is now four nights with no increase in pay. The benefits system welcomes them and makes up the difference.

Independent self-employed boiler maintenence people either work the same 5-day week at the old rate - which presents a discount to their customer, or can choose to work less and/or charge more.

The net effect is that the cost of everything (with a labour element) increases by c.25%, including for those people who now work 4 days instead of five because they thought they would be better off!

Have I misunderstood?

 

[KateCB]

in some cases that may be a true scenario, however, consider the boiler servicing personnel - you have a set number of services to do - if you complete them in 4 days rather than dragging them out to 5, then you get an additional days rest. The emphasis on this type of occupation would be that service/repair standards were not compromised, but the work could, in many cases be carried out in a more time-efficient manner.

There are many office-based jobs that could indeed be completed to their full extent in 4 working days; day 5 off could be the incentive to work when at work, rather than take breaks, surf the internet, have an extended lunch, extend the amount of time it takes to complete a form, file it/record it and mark as complete, etc.

Childcare could be less complicated if the 5th day could be taken within the working week as required meaning that a two-parent family would only require 3 days a week of childcare; better work-life/family balance for child and parents.
Each occupation/level of responsibility would of course have to be trialed and tested, but I don't see why it should increase costs or inflation generally.

ps - the 4 day working week was mooted as being for the same amount of work, in a shorter amount of time, for the same pay, so those cleaners don't lose a nights wage

 

[Mark T Jones]

Various articles last weekend espousing the utopia of less work time, more leisure time etc following an announcement of a trial by several UK companies whereby salaried employees work a four day week without reduction in pay.

Is the four-day week too good to be true?

We talk to the couple designing a new working pattern and ask whether it’s common sense or pie in the sky...

www.telegraph.co.uk

I expect that if adopted, this will lead to inflation, but a more immediate impact could be pushing more low earners into the support of the benefits system.

Taking a random example of boiler servicing, let's assume that the boiler servicing company has a pipeline of work for statutory and warranty purposes, plus ad-hoc servicing and emergency repairs.
It uses a combination of full-time salaried staff (servicing boilers and non-client-facing), and contractors on a day rate.

The salaried staff move to a four-day week, doing 80% of the work they used to do, so increasing their cost per job, pushing prices up (by 25% in simple terms). Contractors take up the slack but day rates move up in response to their salaried peers.

Meanwhile the cleaners/caterers and other low-skilled roles on hourly rates at the company learn that their five nights of cleaning is now four nights with no increase in pay. The benefits system welcomes them and makes up the difference.

Independent self-employed boiler maintenence people either work the same 5-day week at the old rate - which presents a discount to their customer, or can choose to work less and/or charge more.

The net effect is that the cost of everything (with a labour element) increases by c.25%, including for those people who now work 4 days instead of five because they thought they would be better off!

Have I misunderstood?

There is a huge lack of clarity on this topic, whether it involves the same workforce being more productive in the time available, or additional workforce each doing less - or indeed the business just doing less.

Needs some thinking through.

Perhaps after they have thought through the no petrol/diesel cars by 2030 promise

 

[japancool]

Childcare could be less complicated if the 5th day could be taken within the working week as required meaning that a two-parent family would only require 3 days a week of childcare; better work-life/family balance for child and parents.

Here's a radical idea - pay people enough so that a one working parent can support the family, then the other parent can stay home with the kids.

Nah, that'll never work.

 

[Newchodge]

Various articles last weekend espousing the utopia of less work time, more leisure time etc following an announcement of a trial by several UK companies whereby salaried employees work a four day week without reduction in pay.

Is the four-day week too good to be true?

We talk to the couple designing a new working pattern and ask whether it’s common sense or pie in the sky...

www.telegraph.co.uk

I expect that if adopted, this will lead to inflation, but a more immediate impact could be pushing more low earners into the support of the benefits system.

Taking a random example of boiler servicing, let's assume that the boiler servicing company has a pipeline of work for statutory and warranty purposes, plus ad-hoc servicing and emergency repairs.
It uses a combination of full-time salaried staff (servicing boilers and non-client-facing), and contractors on a day rate.

The salaried staff move to a four-day week, doing 80% of the work they used to do, so increasing their cost per job, pushing prices up (by 25% in simple terms). Contractors take up the slack but day rates move up in response to their salaried peers.

Meanwhile the cleaners/caterers and other low-skilled roles on hourly rates at the company learn that their five nights of cleaning is now four nights with no increase in pay. The benefits system welcomes them and makes up the difference.

Independent self-employed boiler maintenence people either work the same 5-day week at the old rate - which presents a discount to their customer, or can choose to work less and/or charge more.

The net effect is that the cost of everything (with a labour element) increases by c.25%, including for those people who now work 4 days instead of five because they thought they would be better off!

Have I misunderstood?

I think you have misunderstood, certainly about the higher paid roles.

Working over 4 days does not, necessarily mean reducing working time by 20%. It could invlve longer days. it could involve piece work - fit 8 boilers every week (no idea of the humbers) as before the change, and have a day off - work smarter.

I absolutely agree about the hourly paid service jobs. What is most likely to happen is that those people will seek additional jobs in the hope they can earn enough to lve on.

 

[KateCB]

Here's a radical idea - pay people enough so that a one working parent can support the family, then the other parent can stay home with the kids.

Nah, that'll never work.

True, it won't work for everyone - WE have kids, but WE had careers before WE decided to have kids, and funnily enough, WE want to continue that even after having kids. The financial ability for one parent to be able to stay at home doesn't mean that they all want to; My training and my husband training shouldn't be wasted and our careers end, just because we could actually afford for one of us to be a stay at home parent

 

[japancool]

Or work from home.

 

[gpietersz]

True, it won't work for everyone - WE have kids, but WE had careers before WE decided to have kids, and funnily enough, WE want to continue that even after having kids. The financial ability for one parent to be able to stay at home doesn't mean that they all want to; My training and my husband training shouldn't be wasted and our careers end, just because we could actually afford for one of us to be a stay at home parent

Your careers would not have to end. You can resume them later, or work part time.

A lot of people would like to stay at home with the kids. The best thing about working from home (which I have been doing for a long time) is spending more time with the kids. I cannot imagine a job I would prefer to be doing instead.

 

[gpietersz]

If I was a great writer whose works would endure for centuries, or a top notch scientist who would really change things, or my work was vitally important in some way and no one else could do it, it might be different. As it is, I cannot see how any kind of normal job is anywhere near as rewarding.

 

[japancool]

Spend time with your kids. They won't be kids forever.

 

[KateCB]

Your careers would not have to end. You can resume them later, or work part time.

A lot of people would like to stay at home with the kids. The best thing about working from home (which I have been doing for a long time) is spending more time with the kids. I cannot imagine a job I would prefer to be doing instead.

Agreed, there are people (not sure on the percentage split) who would like to (or think they would like to!) stay home with their kids, however, some careers cannot be simply 'resumed' or indeed be pursued part-time. There are also parents who, whilst they love their kids, have no aspirations of being full-time parents. There are also many careers where you cannot work from home, and finally, just because you CAN, doesn't mean you want to or have to. I tried it, I was bored, I was climbing the walls...I need to have something other than 'domestic duties' to fill my mind and time with, and that thing I trained for 7 years for was just the thing...

 

[MattRumbelow]

I mean, the invention of the eight hour, five day work week is relatively new. I presume that there were a lot of arguments at the time that, in effect, the companies could not afford it. Turns out they could. Same goes for maternity, annual leave, etc.

People have been talking about a four day work week pretty much since the five day came in. It was understood that, as things became more mechanised, there would be less work to go round. With a shift into robotics, this issue becomes even more pertinent.

As for pushing people into poverty, the new 'living wage' would basically be based on how much you currently need to live, and divided into four days' work rather than five. All other wages would then be based on that new minimum.

I don't think this is the only possible route to a better society but –when you consider that productivity goes up every year– this offers a fairly simple solution on what to do with that increasing productivity.

 

[KateCB]

If I was a great writer whose works would endure for centuries, or a top notch scientist who would really change things, or my work was vitally important in some way and no one else could do it, it might be different. As it is, I cannot see how any kind of normal job is anywhere near as rewarding.

Try it. Give up your job, spend 12 months at home caring for the home and the very young, untrained child, and grow that child. Teach it to use a potty, to talk, to walk, to play, displine, respect. Diarise it daily, come back in a year and re-read this thread, and honestly re-post. Unless you are a domestic homebody in truth, which many are and I thank them for it, then your response will be very different.
Whilst we may not be great writers, or scientists, many of us feel that our contribution to the wider society of work is both as valuable and as rewarding (if not more so) as spending all day every day with our child, simply because our partner can afford to pay for our lives. Children over the decades have grown up with working parents, non-working parents, no parents, and indeed Nannies - we are a rich, broad mix, with different skill sets, that are all as important as each other, but not everyone sees childcare as 'rewarding'. I love my kids, we have fun together, I am proud of my kids and their achievements, but I saw their upbringing as necessary, not rewarding. They now have kids of their own and only one of the three has chosen to be a full-time parent

 

[SillyBill]

In my view this would probably work with little discernible difference to UK productivity vs a 5 day week. A lot of paid work is dragged out or a load of time spent filled out with pointless bureaucracy & admin. Fewer hours would mean greater discipline on focusing on the tasks which produce. This applies to office workers in any case. I don't think the same applies to manual jobs however where very much time spent at the coalface is proportional to the number of units produced. Where this could be a problem for the UK is acting unilaterally when others aren't, in a globalised world if we make ourselves even slightly less competitive we'd have issues.

 

[JEREMY HAWKE]

I think it is a pethitic idea that only supports the workshy.
We would become a third world economy

 

[Deleted member 59730]

I think it is a pethitic idea that only supports the workshy.
We would become a third world economy

I'm surprised at your remark. You must have experience of other country's work methods which don't make them third world economies. What about Italy with big supermarkets only open for 1.75 hours in the afternoon? Spain with its 5 hour lunches but 7:00am starts. France with its 2 hour lunches and also early starts.

 

[gpietersz]

Try it. Give up your job, spend 12 months at home caring for the home and the very young, untrained child, and grow that child

I worked from home from when my older daughter was less than two years old, and before my younger daughter was born, so I have done a lot of that.

Children do not remain babies., they grow and learn, and each phase of their lives is rewarding in a different way.

I saw their upbringing as necessary, not rewarding.

I think parents who feel like that are missing out.

Its something I find hard to empathise with. I am more of a "No one on his deathbed ever said, ‘I wish I had spent more time on my business.’" mind.

 

[JEREMY HAWKE]

I'm surprised at your remark. You must have experience of other country's work methods which don't make them third world economies. What about Italy with big supermarkets only open for 1.75 hours in the afternoon? Spain with its 5 hour lunches but 7:00am starts. France with its 2 hour lunches and also early starts.

I have experienced the slow gogs of Italy however their train system is cheap and spot on ,?
There is a reason why we are one of the riches nations .

 

[Deleted member 59730]

There is a reason why we are one of the riches nations .

But are we the happiest?

 

[JEREMY HAWKE]

But are we the happiest?

No

 

[simon field]

I’m really happy!

 

[Mark T Jones]

I’m really happy!

I'm generally pretty happy - as long as they don't try to make me work 4 whole days.

 

[The Byre]

Have I misunderstood?

In a word - yes! Totally!

The salaried staff move to a four-day week, doing 80% of the work they used to do, so increasing their cost per job, pushing prices up (by 25% in simple terms). Contractors take up the slack but day rates move up in response to their salaried peers.

Experience has shown that they do not do 20% less, but actually complete the work for the week.

Also, with only a four-day week, greater emphasis must be placed upon productivity by management. No more playing solitaire on the laptop and pretending that you are working! No more liquid lunches and a full eight-hour day and all breaks unpaid.

Why would contractors' rates be raised? You pay them by the job, not by the hour - or at least you should!

Meanwhile the cleaners/caterers and other low-skilled roles on hourly rates at the company learn that their five nights of cleaning is now four nights with no increase in pay. The benefits system welcomes them and makes up the difference.

That leaves them free to open an online shop for one day a week, or play with the kids, or take on other hourly gigs.

The net effect is that the cost of everything (with a labour element) increases by c.25%, including for those people who now work 4 days instead of five because they thought they would be better off!

The net effect SHOULD be an increase in productivity and a happier workforce.

And if there is one thing that stands out in UK companies, it is low and falling productivity!

If I walk into almost ANY UK company, someone somewhere is swinging the lead. Mrs. McWirter in accounts is looking at her smartphone. Jimmy in dispatch is on the loo - again! The staff come in, yawning and scratching themselves, at around nine and the manager seems to take 2hr lunches and only comes swanning in at ten.

I start work at eight. If I was (still) working in a factory, I would expect to have to start at six. Lunch 11:30 - 12:00. So knock-off at 14:30. Or if we go to a 35-hour week, 15:15.

A four-day week would also mean more payment by results and not for sitting around, pretending to be useful.

 

[Deleted member 59730]

Having worked in several other countries I can say that the UK work systems I have experienced are the most inefficient. British builders who spend half the morning at the builders' merchants. Workmen who wont start until after a cuppa. Workshops so badly organised that they are full of work they cannot do because of late arrival of parts.

 

[Mr D]

Here's a radical idea - pay people enough so that a one working parent can support the family, then the other parent can stay home with the kids.

Nah, that'll never work.

That would require paying people doing the same job different wages.
The family of 5 kids needing much higher gross pay for the wage earner than the family with one child.

 

[SillyBill]

Always been impressed dealing with the Italians, Northern Italy still produces a lot. Their economy was larger than ours pre-Euro while we were the "sick man" of Europe. The Euro currency has basically cast a 2 decade shadow on their industry while lighting a fire under Germany's, not a reflection of the industriousness of the Italian people in my view, rather a political project playing favourites. All anecdotals of course but also I attest to being more frustrated often with British business interactions than continental. The French in my observation work when they are at work (novel), appears to be no messing about and straight to the point (can come across as rude if not used to it). And Germans get the details right, can come across as inflexible but given they do seem to know what they are talking about, that can be forgiven.

 

[Scubadog]

For office workers, I am sure this would be great.

For manual labour....its an awful idea, likely to lead to cut corners, longer hours and accidents in the workplace.

A bricklayer all of a sudden has to lay 20% more bricks every day

Electricians have to terminate 20% more glands every day

Farmers Have to plough 20% quicker?


What do these people think we do? It's not sitting around wasting 20% of our time every day! Most of these types of ideas (like the idea about banning private vehicle use) comes from people loving in cities, with crappy office jobs. If you don't like your job, or can afford to reduce your wasted time by 20% then do that! But don't assume it applies to all industries without even the slightest idea of how they work.

 

[simon field]

For office workers, I am sure this would be great.

For manual labour....its an awful idea, likely to lead to cut corners, longer hours and accidents in the workplace.

A bricklayer all of a sudden has to lay 20% more bricks every day

Electricians have to terminate 20% more glands every day

Farmers Have to plough 20% quicker?


What do these people think we do? It's not sitting around wasting 20% of our time every day! Most of these types of ideas (like the idea about banning private vehicle use) comes from people loving in cities, with crappy office jobs. If you don't like your job, or can afford to reduce your wasted time by 20% then do that! But don't assume it applies to all industries without even the slightest idea of how they work.

Talk about completely missing the point.

It’s about realising that time is much more valuable than money.

 

[JEREMY HAWKE]

Talk about completely missing the point.

It’s about realising that time is much more valuable than money.

Money is not everything but you cant do very much without it ??

 

[Lucan Unlordly]

I probably spend a day a week on this and other forums!?

 

[The Byre]

A bricklayer all of a sudden has to lay 20% more bricks every day

Electricians have to terminate 20% more glands every day

Farmers Have to plough 20% quicker?

That opinion is in no small part, the core of the problem in unproductive workplaces. And it is in no way just a UK problem. The moment labour becomes more expensive, it matters little how fast a brickie lays bricks, or a sparkie wires up the second fit, or even how fast a farmer ploughs a field.

What matters is HOW they do it.

Let's say (just for the sake of argument) that labour now costs £100 an hour. So now our electrician, bricklayer, or farmer all cost us £800 per day. Previously, they cost us just £20 per hour, so £160 a day. That's a big jump in labour costs - so we must now avoid labour input as much as possible. Each and every one of those journeymen now has to be fives times as productive as they were before. How do we achieve that?

Obviously, we cannot make any one of them work five times as fast. So we have to make them work five times more efficiently if we are to maintain our labour costs at previous levels.

In our extreme case of a massive jump in labour costs, what we find is an even bigger jump in productivity, once we have restructured the workplace. I have done all three tasks many times and because I am a hobby farmer with a tractor that is over 50 years old, because I was renovating an existing building using square electric sockets and because I was hand-mixing and laying bricks, it took me -
- half a day to plough a one-acre field
- 20 minutes to wire up and fit a socket
- all bloody day to build a small wall (and it was crooked anyway!)

• Now take me out of my ancient International Harvester 475 with a two-furrow plough and put me into some giant articulated eight-wheel CAT pulling a 50-furrow plough at 20mph and that one acre is done every few seconds.
• Use round push-n-tug sockets so that the hole is drilled in ten seconds and the wires go in without messing about with screws in another ten seconds and the socket clips into the round hole and the 20-minute fit become a one or two minute fit.
• Build the wall in a factory, pre-wired and pre-plastered.

Suddenly, by restructuring the workplace, I have become somewhere between ten and 20 times more productive. Despite my sudden need to trouser £800 every damn day, labour costs per unit have FALLEN dramatically.

• As a sparkie, labour costs per socket are halved.
• As a farmer, labour costs are a tiny fraction of the £80 per acre I used to cost.
• As a brickie, I was pretty damn useless in the first place!

OK, £100 an hour is somewhat extreme, but even under such an extreme increase in labour costs, even if we factor in the additional costs for equipment - or in the case of the sockets, additional costs per socket of about £1 - we still see a massive fall in overall costs.

 

[NickGrogan]

That opinion is in no small part, the core of the problem in unproductive workplaces. And it is in no way just a UK problem. The moment labour becomes more expensive, it matters little how fast a brickie lays bricks, or a sparkie wires up the second fit, or even how fast a farmer ploughs a field.

What matters is HOW they do it.

Let's say (just for the sake of argument) that labour now costs £100 an hour. So now our electrician, bricklayer, or farmer all cost us £800 per day. Previously, they cost us just £20 per hour, so £160 a day. That's a big jump in labour costs - so we must now avoid labour input as much as possible. Each and every one of those journeymen now has to be fives times as productive as they were before. How do we achieve that?

Obviously, we cannot make any one of them work five times as fast. So we have to make them work five times more efficiently if we are to maintain our labour costs at previous levels.

In our extreme case of a massive jump in labour costs, what we find is an even bigger jump in productivity, once we have restructured the workplace. I have done all three tasks many times and because I am a hobby farmer with a tractor that is over 50 years old, because I was renovating an existing building using square electric sockets and because I was hand-mixing and laying bricks, it took me -
- half a day to plough a one-acre field
- 20 minutes to wire up and fit a socket
- all bloody day to build a small wall (and it was crooked anyway!)

• Now take me out of my ancient International Harvester 475 with a two-furrow plough and put me into some giant articulated eight-wheel CAT pulling a 50-furrow plough at 20mph and that one acre is done every few seconds.
• Use round push-n-tug sockets so that the hole is drilled in ten seconds and the wires go in without messing about with screws in another ten seconds and the socket clips into the round hole and the 20-minute fit become a one or two minute fit.
• Build the wall in a factory, pre-wired and pre-plastered.

Suddenly, by restructuring the workplace, I have become somewhere between ten and 20 times more productive. Despite my sudden need to trouser £800 every damn day, labour costs per unit have FALLEN dramatically.

• As a sparkie, labour costs per socket are halved.
• As a farmer, labour costs are a tiny fraction of the £80 per acre I used to cost.
• As a brickie, I was pretty damn useless in the first place!

OK, £100 an hour is somewhat extreme, but even under such an extreme increase in labour costs, even if we factor in the additional costs for equipment - or in the case of the sockets, additional costs per socket of about £1 - we still see a massive fall in overall costs.

Combined with a massive increase in unemployment.

One sparkie can now complete a house in less than a day, the brickie is now bolting together wall sections and farmer is covering a much larger area (in the USA at least, UK farms tend to be to small)

 

[NickGrogan]

Talk about completely missing the point.

It’s about realising that time is much more valuable than money.

It's not though, is it?

 

[Newchodge]

It's not though, is it?

It certainly isn't for everyone. An employee who earns just enough to live on will not be grateful for a 5% cut in income in return for a 20% cut in time working, as they will not be able to survive. Alternatively someone who earns more than enough to pay all their bills and a housekeeper and a nanny may be really happy to have more time to spend as they wish.

 

[simon field]

It's not though, is it?

I’m taking a guess that you know (or could work out) how much money you’ve got.

Do you know how much time you’ve got?

 

[simon field]

It certainly isn't for everyone. An employee who earns just enough to live on will not be grateful for a 5% cut in income in return for a 20% cut in time working, as they will not be able to survive. Alternatively someone who earns more than enough to pay all their bills and a housekeeper and a nanny may be really happy to have more time to spend as they wish.

So what would be stopping them from doing something to improve their situation? Learning a new skill, starting a small business etc etc?

 

[The Byre]

Combined with a massive increase in unemployment.

Yes and no.

In theory, no. Experience in the past shows us that an increase in productivity ALL THINGS BEING EQUAL (which they never are!) should lead to an increase in standards of living as a direct result of employers willing to pay more.

HOWEVER

Let's look at Germany - labour costs - OUCH! They are high. As in bloody high! It costs about €2 to put €1 into a person's trouser pocket. Unless of course, they are highly paid and then it costs €3 to give that person an extra €uro.

It wasn't always like that, but then social pressures meant that successive governments had to provide more social care and more support for the weaker in society. And that meant higher taxes and other payroll deductions. And of course, more workers' rights (canteen, parking, pension funds, sickness pay and 1001 other things).

I was a part of that world and I saw the calculations. Whole factories were closed down and production was moved to Eastern Europe and China. The German workers received large redundancy payouts, but future generations no longer could look forward to those generous conditions of employment.

Some traditional German manufacturers kept basic assembly in Germany to maintain that all-important 'Made in Germany' label on their products and prestige German cars could still have their VIN proudly begin with a W.

So instead of greater levels of automation - which, as labour costs increased, is what happened in the past - over the past 30 years we have seen a steady migration of production from Germany to Eastern Europe and the Far East. At the same time, millions of refugees and foreign workers have poured into Germany, many claiming those very generous benefits that are being paid for by fewer and fewer wage earners.

In the US, the situation is far more extreme - more migrants, hardly any manufacturing left as cars and everything else is made South of the border somewhere and all those crazy 'stimmy' cheques were spent on toys from China.

To state that this is leading to social pressures and public funding short-falls is to state the blindingly obvious!

 

[Newchodge]

So what would be stopping them from doing something to improve their situation? Learning a new skill, starting a small business etc etc?

Becasue they cannot afford to eat. They would have to get another job immediately to make up the hours lost.

 

[simon field]

Becasue they cannot afford to eat. They would have to get another job immediately to make up the hours lost.

Which they could do with their additional time?

 

[Newchodge]

Which they could do with their additional time?

So what is the point for them?