Magazine article CMA - the Management Accounting Magazine

The 35-Hour Work Week

Magazine article CMA - the Management Accounting Magazine

The 35-Hour Work Week

Article excerpt

France announced a 35-hour work week in 1997 and ItaLy expects to do the same in 2000. Could this idea help Canada?

The percentage of those who lose their jobs and find it difficult to get a new one seems to increase all the time. Youth face a mountain of difficulties in passing from the educational system to the labour market. This realization keeps young people longer in the school system, often over-qualifies them for the jobs they eventually find, and increases the average age at which youth start their career path.

Young people, while better prepared today to compete in the labour market, don't face the same favourable environmental circumstances their parents faced. Education, skills, degrees and diplomas don't seem to go as far as they used to. Increasingly, larger proportions of post-secondary educated graduates are still unemployed a full year after graduation. The longer the person stays unemployed, the sooner their qualifications seem to lose their lustre.

Just a few of the traditional solutions are to foster a faster pace of national economic growth where unemployment is high, increase private and public investments to improve job creation, and re-distribute income and government spending (mainly through taxation) to transfer income from the haves, to the have-nots, by supporting a social safety net. There are many more ideas that involve taxation schemes, reorganizing, re-engineering and deregulating the economy.

A new solution is to legislate a 35-hour work week.

Labour and management may have different approaches as to how it should be implement. Labour favours reduction of work hours to 35 without a corresponding reduction to remuneration. Employers would argue for a proportionate reduction to salaries to reflect the lower number of working hours.

A 35 hour week from a 40 hour week with no reduction in remuneration translates approximately to 14% real salary increase. Assuming labour costs represents 40% of the total production costs, that will increase overall production cost by 5.6%. This obviously will consume some of the profits, or to the extent the additional cost is passed on to the consumer, will reduce the price competitiveness of the products in the international markets.

As the work week shrinks, so should the employees' income, in order for the cost of production to remain fixed. The employer may assume some extra costs by managing a higher number of employees than before, but this cost is not expected to be very high. …

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