Tom,
A few comments on your paper: One of the points you make is that an
across-the- board reduction of work time will increase employment (reduce
unemployment) because more efficient firms will have little difficulty
meeting the new situation, but less efficient firms will have to take on
additional labour in order to do so. What if what really happens is that
the increased cost advantage of the efficient firms becomes so large that
they can significantly reduce prices and drive the less efficient firms out
of the market, thereby increasing unemployment? Actually, what your model
suggests is that things could go either way: it is possible that the less
efficient firms would, in a reasonable time, become more efficient and stay
in business, or they could prove unable to make the necessary changes and
fail.
There is another point here: this is that the efficient firms, if they could
indeed produce as much in 7 hours as in 8, would probably already have got
rid of their eighth employee before they were required to move from 8 to 7
hours. If their management was really efficiency oriented, this surely
would have been recognized as putting them into a better competitive
position.
You cite several historic cases in which work time was reduced while output
increased. But surely not all of this can be attributed to a reduction in
work time. Some of it would have been based on innovation, the introduction
of new technology and improved methods of undertaking work. The process may
in fact have been somewhat the other way around. The motive might have been
to reduce labour costs as labour became more aggressive, scarce and
expensive. It would not matter to management whether the reduction of
labour costs was done by laying off people or by reducing work time or, as
is most likely, by doing both. But to cut labour, labour-saving innovation
was needed. Henry Ford could make grand gestures and pay people six days
for five days of work. But because of the assembly line, he not only had
far fewer workers, his profits must also have risen considerably because of
much higher productivity. As Eva would put it, he was simply giving back a
little of what he had taken in the first place. His poor rivals who
continued to put cars together by hand in small, garage-like shops could not
adapt and went out of business. I once read that, prior to about 1920,
there were hundreds of shops producing cars in North America. With the
introduction of the assembly line and enormous savings in labour costs and
economies of scale which resulted, this quickly whittled down to a few
dozen. I doubt that this increased employment in the automobile industry.
What seems to underlie your paper as an implicit assumption is a
considerable homogeneity of labour. You appear to assume that you can cut
hours and take on the 8th or 9th worker because he or she will be capable of
quick integration into the firm's productive process. In many firms, and
for many occupations, this may simply not be so - or at least it is less so
now than it was a few decades ago. In any bureaucracy, government or
corporate, people vary tremendously in what they can do and in their value
to the organization. Many people simply have to put in long days because
they are the only ones who can do particular jobs - they simply cannot be
replicated or replaced. You could not cut their time down to a standard 7
hours without a large loss in productivity. I'm not arguing against a
reduction in work time where it makes sense, but I do feel that, in a
knowledge based economy, expertise resides with the individual. Cut his or
her time back, and you could lose a considerable amount of product. Where
employees do not have specialized knowledge and can be replicated or
replaced, cutting back time and increasing employment is probably possible.
However, such employees are in some danger of being cut out altogether
because of technological replacement.
Generally, then, what you've put forward may still apply to a considerable
part of the work world, but there are some problems.
Ed Weick
