COVER

ARE WE CHEATING OUR KIDS?

VICTOR DWYER March 14 1994
COVER

ARE WE CHEATING OUR KIDS?

VICTOR DWYER March 14 1994

The four-day week

SPECIAL REPORT

Thousands of Canadians are switching to a shorter work week. But will it help cure the unemployment crisis?

JOHN DALY

At first, Bell Canada technician Dan Legrow says he was upset about losing $50 from his weekly paycheque. Under his union’s new two-year contract, which took effect in January, Legrow and 13,500 other Bell Canada installers and technicians in Ontario and Quebec now work a 36-hour week over four days instead of 38 hours over five days. As well, they must take five days of unpaid leave per year. Their union, the Communications, Energy and Paperworkers’ Union, only agreed to the cutback after the company threatened to lay off up to 2,000 of their members. Despite the 7.5-per-cent cut in pay, Legrow, 42, who installs computer data lines and circuits for businesses in the Toronto area, says that he likes the extra day off. “I was waiting to get the bathroom painted,” he says, “and I’ve got that done now.” Legrow, who still expects to earn $47,000 this year, has worked for Bell for 20 years and says that other long-serving employees who have secure jobs should make sacrifices to help younger workers through hard times. “I see it as a solution for the unemployment problem,” Legrow says. “If we could all work less, then maybe everybody would get working.”

Long a cherished dream of union leaders and other social activists, the four-day work week is becoming a reality for thousands of Canadians. But unlike the shift from the fiveand-a-half-day to five-day week in the boom decade that followed the Second World War, most Canadians now working reduced hours are also earning less as a result. Like Legrow, many of them are under economic pressure from employers who are threatening layoffs unless they work shorter hours for less pay.

Others, particularly young parents who cannot afford to raise a family on just one salary, are cutting back or rearranging their work week to spend more time with their children.

But at the same time, thousands of other Canadians in booming sectors like the auto industry are working near-record amounts of overtime. Some experts argue that shortening the work week for those who already have jobs might at least provide some work for Canada’s 1.5 million unemployed. Human Resources Minister Lloyd Axworthy also appears to be intrigued by the idea. Last month, as part of his sweeping re-evaluation of Canada’s social-safety net, he established a nine-member panel of business and union leaders, including Quaker Oats Co. of Canada Ltd. chairman Jon Grant and Canadian Labour Congress president Bob White, to examine the issue of work time and the distribution of work and report back to him by September. “It is clear that there are too few jobs,” said Axworthy. “However, the chal-

lenge lies not only in the number of jobs, but in their distribution.”

In considering a shorter work week as a way of fighting unemployment, Axworthy is in tune with his counterparts in the world’s other leading industrialized nations. The issue of work time will be one of the main topics discussed at a special summit on the unemployment crisis within the Group of Seven leading industrial nations to be hosted by U.S. President Bill Clinton in Detroit on March 13. Finance Minister Paul Martin, Industry Minister John Manley and Trade Minister Roy MacLaren are scheduled to accompany Axworthy.

Certainly, the unemployment problem in Canada is severe— and so far, traditional tactics for combating it have not succeeded.

Statistics Canada declared the recession officially over in January,

1993, but the national unemployment rate remains stubbornly high at 11.4 per cent. As well, U many companies are still slashing f their payrolls in response to techL nological change and intensifying domestic and international competition. As a result, most forecasters say that unemployment will remain at double-digit levels even as a recovery gains momentum. However, ^ Ottawa and the provinces are all weighed | down with budget deficits and are in no posi| tion to stimulate job creation either by inijj creasing spending or cutting taxes. In his £ first budget last month, Finance Minister I Paul Martin announced no major new job Legrow: ‘If we could all work less, then creation initiatives and he reduced unemmaybe everybody would get working’ ployment insurance benefits.

Yet at the same time as 1.5 million Canadians are looking for work, many of the 12.5 million people with jobs are working harder than ever. Officially, the length of the average scheduled work week for Canadians employed in manufacturing—which traditionally has set the pattern for other sectors—is just over 38 hours, and has changed little since the late 1960s. But a Statistics Canada survey published last year estimated that in any given week, 800,000 Canadians work overtime for pay, putting in an average of eight extra hours.

So far, efforts by governments to save jobs by reducing costs through a shorter work week, both among their own employees and in the private sector, have proved to be controversial at best. In the largest such initiative, Ontario Premier Bob Rae’s NDP government provoked a storm of protest from more than 950,000 unionized provincial and municipal civil servants by passing its Social Contract Act last July. It called for a three-year wage freeze and requires employees earning more than $30,000 annually to take up to 12 unpaid

days off each year. The alternative, Rae argued, would have been to lay off up to 40,000 people.

In Ottawa, one option Axworthy is considering is expanding a small federal work-sharing program that pays workers unemployment insurance benefits for one day each week if they voluntarily cut back to four days from five. Aimed at small employers facing temporary financial problems, the program was introduced in 1982. It pays workers benefits totalling 55 per cent of their insurable earnings, to a maximum of $85, for the fifth day of the week. But even in 1991, the low point in the recession, payouts totalled $160 million. Last year, that declined to about $60 million. Both employers and employees enrolled in the program have consistently rated it highly. However, the department’s study of the 177,800 workers who passed through the program from 1989 to 1991, revealed some flaws. For 29 per cent of those workers, it only delayed permanent layoffs for a few weeks or months.

Regardless of the approach, the idea of shortening the work week to alleviate unemployment is hardly new. Union leaders have argued for a shorter work week without any reduction in pay, in both good and bad times, since the late 19th century. During the Great Depression of the 1930s and other slowdowns, they billed it as a job creation strategy. But according to Desmond Morton, a labor historian and principal of the University of Toronto’s Erindale College, unions have only won shorter work weeks during economic booms, not slowdowns. “Good things happen in good times,” says Morton. “In bad times, people get meaner.” Morton adds that in the early stages of a recovery, employers tend to work their existing staff longer hours, rather than hire more workers, because they are uncertain that the upswing will last. Only when they are feeling more secure about their prospects

do they reduce hours and begin hiring again.

That is precisely what has happened at Chrysler Canada Ltd.’s booming minivan plant in Windsor, Ont. Under a new contract signed with the Canadian Auto Workers union last September, Chrysler agreed to reduced hours —and wage increases—for the 4,200 unionized workers in the plant It also added a third daily shift of more than 800 new assembly-line workers. In recent years, many employees in the plant have been working up to seven days a week as Chrysler struggled to fill orders. Some workers who had started to count on the overtime pay, resisted the proposals for reduced hours at first. But in return, the company agreed to increase the $20.48-an-hour wage for assemblers by one per cent this year, and to keep paying them for an eighthour daily shift, rather than the 7'A hours they now actually work, to accommodate the third shift.

As well, because the plant has moved to seven-day-a-week, 24-hour production, some of the new arrangements for skilled trades personnel who repair and maintain equipment in the plant are even more lucrative. James Lejeune, a 26-year-old millwright who earns $24.74 an hour, now works 38 hours a week spread out over four days even though he gets paid for 52 hours. Prior to the new contract, he frequently worked six days a week. “You start to bum out after a while,” he says.

Quite apart from whether reducing or rearranging the work week will make a dent on their bottom line, many employers are at least studying the issue because of employee stress in raising a family. Like many large c ^mpanies, the Bank of Montreal now has 2,500 of 28,000 employees participating in its flexible work arrangements program. Johanne Totta, the bank’s vice-president of workplace equality, says the plan grew out of a 1991 survey of employees that re-

SPECIAL

REPORT

vealed that many were having trouble juggling the demands on their time. Under the program, any employee can propose alternative work arrangements to a supervisor— such as a four-day work week, jób sharing or working at home

For those employees with young children, just rearranging one day, or a few hours, can make a huge difference. Suzanne McGugan, a 43-year-old project manager for the bank who supervises the installation of large new computer networks, says she came close to quitting her job last May when she lost the services of a nanny who took care of her fouryear-old son. Because he was entering kindergarten, she no longer required a fulltime nanny. But he had to be dropped off at a school bus at 8 in the morning, and picked up again just after 5 p.m. Since then, McGugan—linked to her office by computer—has worked at home for 10 hours every Monday. That allows her to arrive at 9:15 a.m. and leave at 4:00 p.m. on the four days when she goes into the office. “It was either leave the bank or come up with another arrangement,” says McGugan. “It’s been a lifesaver.”

Despite the growing popularity of four-day or other rearranged work weeks, many employers caution that there are large regulatory hurdles that they must overcome to implement them. The most costly, according to Jayson Myers, chief economist of the Canadian Manufacturers’ Association, are so-called payroll taxes that include employer’s unemployment insurance premiums, contributions to the Canada Pension Plan and provincial worker’s compensation plans, plus contributions to their own company employee benefit plans. Myers says those taxes now make up about one-fifth of an average manufacturing worker’s wage and benefit package. While those contributions are to some extent geared to wages and salaries, they are almost like fixed costs incurred the moment an employer hires another worker. And they are rising. Myers says payroll taxes have increased by almost 45 per cent over the past five years. As a result, he says, it is no wonder that many employers prefer to work existing staff overtime, rather than hire another worker and pay both a new employee’s wages and another set of payroll taxes.

But advocates of work-sharing, including Frank Reid, a professor of economics at the University of Toronto, say that employers and governments can tie both the premiums and benefits in those programs more closely to hourly earnings, and remove some of the technical obstacles to work-sharing.

Regardless of those costs, at least some employers and workers are prepared to experiment with a four-day week in the hope that it will reduce unemployment. “I say, try it for a year,” says Dan Legrow, even though the experiment is costing him money, “ft they don’t lay people off, maybe we can all get a four-day week at the same pay.” Despite his enthusiasm, that day appears to be a long way off.

JOHN DALY