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Labour’s four-day week is just a terrible waste of time

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Labour's four-day week is just a terrible waste of time Posted by David Smith at 09:00 AMCategory: David Smith's other articles My regular column is available to subscribers on www.thesundaytimes.co.uk This is an excerpt. Sometimes you are just spoiled for choice and, suspend your disbelief for a second, on this occasion it is the politicians who are spoiling us. The Tories will be revealing all in their manifesto today, an odd day for a launch, but they will have to go some to match the cornucopia unveiled by the Labour party on Thursday. There is enough in Labour’s manifesto for not one, but a dozen columns. Fortunately there is a cut-off date, December 12, to stop me doing that. At its heart is a simple message. The Tories, with their cruel austerity, have been the party of

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Labour's four-day week is just a terrible waste of time

Posted by David Smith at 09:00 AM
Category: David Smith's other articles

My regular column is available to subscribers on www.thesundaytimes.co.uk This is an excerpt.

Sometimes you are just spoiled for choice and, suspend your disbelief for a second, on this occasion it is the politicians who are spoiling us. The Tories will be revealing all in their manifesto today, an odd day for a launch, but they will have to go some to match the cornucopia unveiled by the Labour party on Thursday.

There is enough in Labour’s manifesto for not one, but a dozen columns. Fortunately there is a cut-off date, December 12, to stop me doing that.

At its heart is a simple message. The Tories, with their cruel austerity, have been the party of food banks, rough sleeping and “communities blighted by lack of investment, endless cuts to vital services and millions struggling to make ends meet, while tax cuts are handed to the richest”. Labour had a go at an austerity-based campaign in 2017, and it worked quite well.

This one goes further in its ambitions for public spending, including higher public sector pay, raising the increase in NHS spending from 3.4% to 4.3% a year, abolishing tuition fees, the £500m-plus annual running costs of British Broadband and £10.8bn a year for free social care for the over-65s.

That will add more than £80bn a year to day-to-day government spending by 2023-24, on top of which there will be a £400bn National Transformation Fund. The latter will be funded by borrowing, the former by a very precise £82.9bn of additional taxes, equivalent to 4% of gross domestic product.

The 45% income tax rate applicable at £80,000 and the new “super rich” 50% rate at £123,000 will raise £5bn a year, putting corporation tax back up to 26% and a new unitary tax on multinationals £30bn. Higher taxes on capital gains and dividends will be worth £14bn a year, a financial transactions tax £8.8bn. And so on, Labour says it has taken into account behavioural changes in calculating its £82.9bn tax hike, which others will dispute, as they will dispute the idea that 95% of taxpayers will be unaffected by these changes, a claim that Paul Johnson, the saintly director of the Institute for Fiscal Studies, has described as “simply not credible”.

There is also, of course the biggest programme of nationalisation since the Attlee government of 1945-51. Private landlords will not be forced to sell to tenants at a discount but they will face rent controls. There will be a pilot programme to test whether a universal basic income works. I can save them the time and money. It doesn’t.
I could go on. But I need to pin something down and I choose Labour’s policy of promising a four-day, 32-hour week within a decade. It says more about how Labour thinks the economy works, even than all of the above.

It is an odd policy, intended to be populist but regarded with scepticism and even amusement among those it is intended to persuade to vote Labour. Boris Johnson was laughed at in last week’s ITV leaders’ debate when he said that telling the truth was important – he has been hauled up for telling porky pies even about pork pies -and Jeremy Corbyn was when pressed on the 32-hour week.

John McDonnell, the policy’s architect, commissioned a sympathetic academic expert, the eminent economic historian Lord Skidelsky, to examine the policy, which he did in a paper published earlier this year by the Progressive Economy Forum, called to How to achieve shorter working hours. But he declared that “capping working hours nationwide, on the lines of France’s 35-hour working week, is not realistic or even desirable, because any cap needs to be adapted to the needs of different sectors”.

Labour, according to the argument set out by Corbyn in the debate, and repeated in the manifesto, would square the circle of a four-day week, ensuring workers do not suffer pay cuts or firms big increases in costs, by raising productivity. As the manifesto put it: “Labour will tackle excessive working hours. Within a decade we will reduce average full-time weekly working hours to 32 across the economy, with no loss of pay, funded by productivity increases.”

Let us think about that for a second. The absence of productivity growth is the problem that has bedevilled economists and policymakers for a decade. Labour thinks productivity can be revived by dictating a maximum working week of 32 hours. Would firms invest in such circumstances to bring about the necessary productivity revival? I think not.

Let us think about it a little more. Suppose that productivity does revive over the next few years, as we would hope it does. Workers would expect that to be reflected in higher pay, and rising real wages. Most would not be happy for pay to stand still just so they could achieve a reduction in working hours.

Clearly, as discussed here before, if people are overworked or overstressed, there is the possibility of productivity gains from making them happier. Some isolated experiments with four-day weeks have suggests this is the case. But the progress towards a four-day week has been backwards, rather than forwards recently.

There was a fanfare when the Wellcome Trust announced that it was examining whether to put its employees on a four-day week. But the plan was shelved as “too operationally complex to implement” and unfair on those employees it would be difficult to switch. There were suggestions, supported by some academic research, that stress caused to employees of trying to cram five days of normal work into four actually reduced productivity.

Above all, this idea is a throwback to a different age, when governments courted the unions, not business. The Trades Union Congress (TUC) likes it, and has called for it because it speaks to a time when powerful unions sat down with big employers and arm-wrestled, often interspersed with industrial action, over pay and conditions.

The world has changed. The great reduction in working hours as a result of factory automation are over. The unions are still influential and have solid membership in industry and in the public sector but are close to being irrelevant in private sector services; which accounts for the bulk of employment. Only 23% of all employees are union members; 13.5% in the private sector and 52% in the public sector.
The nature of employment has changed. Clocking in and clocking off is now a rarity. Many people, in offices and elsewhere, work as long as the task requires.

For those on the edges who have to maintain several toeholds in the job market, discussed here last week, the 32-hour week is either an irrelevance or an unattainable goal; they would love to have a job which gave them so many hours.

It should be thrown back into the pond of unworkable ideas. This election is bringing out quite a few of those.

Labour's four-day week is just a terrible waste of time
David Smith
David Smith is economics editor of The Sunday Times. His website is http://economicsuk.com . His latest book is Something Will Turn Up.

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