Overworked Britons, leisurely continentals?

The readers of the Daily Mail were not amused, judging from the multitude of furious comments below this article. The newspaper claimed that while other Europeans were enjoying much shorter working hours now than in the 1980s, Britons were working longer, thanks to the legacy of ‘Thatcherism’:

‘Britain is the only country whose people work harder than they did in the 1980s, an international study has found. Margaret Thatcher’s workplace revolution has seen Britons working more hours per week than when she was in Number Ten.’

Let’s ignore the question whether long working hours are, in themselves, ‘good’ or ‘bad’. Let’s just look at the most straightforward measure of working time, which is the total number of hours worked over the year, divided by the average number of people in employment in the same year. This measure reveals a clear long-term downward trend. In 2007, average annual working time was 270 hours shorter than in 1970, the equivalent of 34 workdays. When choosing 1988 as a benchmark year, the reduction still amounts to 125 hours, equivalent to 16 workdays.

Average annual hours actually worked per worker

(Source: OECD StatExtracts)

Even though this measure does not include those working zero hours, i.e. the unemployed and the economically inactive, we can still identify high-unemployment periods in the graph. This must be due to the ‘echo’ of unemployment: when unemployment rises, some of those who do not lose their jobs outright will still experience an involuntarily shortening of their working week.  

This makes the trend anything but smooth. Between 1979 and 1981, working hours experienced an extremely sharp drop, echoing the exceptional increase in unemployment during that recession. From then on, working hours rose again, but only in 1988 did they resume their long-term trend of a gradual reduction.

As a result, the ‘normal’ level of annual working time of the early 2000s was about equal to the recession level of the early 1980s. But for a snapshot comparison to be meaningful, we either have to compare a growth period with another growth period, or a recession with another recession.

In 2009, for example, average annual working time was down again compared with just two years earlier: 27 hours, or three and a half workdays. Presumably, the affected readers of the Daily Mail were no less angry about this development than they were about the supposed ‘legacy of Thatcherism’.

You're right, Kristian. I had seen this article and had similar thoughts to you. In any case this kind of aggregate comparison is not always helpful. The figures are for all workers, full-time and part-time, and an increase in average hours worked by part-timers has probably taken place while there has certainly been a fall in the standard working week for full-time workers plus an increase in statutory holidays over this period (not to mention the Working Time Directive which has dramatically reduced, for example, hospital doctors' hours). In addition if as I imagine these figures are based on Labour Force Survey data they will be based on employee response and will include, for many salaried workers, 'unpaid' work at home. On this basis academics often self-report as working 50+ hours per week.
We're all working too hard. Is that why there aren't enough jobs to go around? Or to put forward a more sensible question, will anyone ever again produce sensible, relevant statistics about anything.
I'm sure you are not serious about the implicit suggestion that cutting average hours would create lots of extra jobs, a fallacy which teh French succumbed to a few years ago. They still have higher unemployment than us. On the stats point, it is very confusing but I do have a soft spot for the OECD, and for the ONS, who produce some excellent data. However figures need to be interpreted and journalists are not always very good at this, particularly when they are in search of an easy headline.

This article completely fails to address the obvious questions posed by the data.

(i) How much of the decline in average working hours in the UK from 1987 to 2009 is due to increases in the proportion of part-time workers? Judging by the number of such jobs currently being advertised I would argue it is most, if not all and then some. My local supermarket recently advertised four new vacancies. All were for less than 16 hours a week, and at least three of them could have been combined into a single job. Why does a company with profits in the billions need to save £20 a week on NICs in this way? Do such actions really benefit the economy as a whole? Definitely not!

(ii) Is this trend towards part-time and casual work replicated in the rest of the EU? Probably not.

(iii) If not, then why is the average working year still lower in other EU countries? Probably because full-time workers in these countries work shorter hours than full-time workers in the UK (as the Daily Mail article apparently suggests).

(iv) So why is productivity and the standard of living higher in other EU countries? It should be obvious that employing one person for 30 hours will be more productive that employing two for 15 hours - less training, travelling, management time etc. Of course the other reasons are that in the UK we have always had a lot of bad managers, a disinclination to invest, and an aversion to employing quality people. British Industry is not exactly renowned for its attempts to headhunt the best scientific and engineering talent from our best university.

So why do we in the UK work such long hours? To pay our overvalued mortgages, that's why. Like most ills in this country, our lifestyle is driven by our broken housing market. Why does the IEA have so little to say about correcting that?

The reality is that we live in a two-tier Britain: one where most people work long hours, and the other where people have too little or no work to support themselves. The latter inevitably involves State subsidy of private sector jobs via the benefit system and NIC avoidance. Unfortunately, it is a false economy.

Some more observations. The proportion of part-time employment in total employment in the UK did rise between 1987 and 2009, from 21.7% to 26.3%. This is above the European average but not dramatically so. A number of other countries, most notably Netherlands, have a higher proportion of part-time work. The vast majority of women and men working part-time in the UK do so from choice (ie they don't want FT work). This isn't always the case elsewhere in Europe.

The data below is taken from the OECD site quoted by Kristian Niemietz above, so I'm rather surprised he didn't use this data himself. As you can see the OECD rather helpfully quantify the proportion of workers who work differing numbers of hours per week. It is therefore interesting to compare the profile of the UK with those of our major economic rivals in the EU, France, Germany, Italy, Sweden and the Netherlands. I have also listed the mean annual hours per worker. All data is for 2009.

Hours UK Fr Ger It Swe Neth

-------------------------------------------------------------------------------------------------------

0-19 12.9 5.2 12.2 5.1 6.5 20.8

20-29 11.0 8.2 9.7 10.7 8.2 15.9

30-34 5.9 5.8 5.4 4.7 11.2 11.6

35-39 24.1 46.4 20.7 17.7 16.6 19.4

40+ 46.0 34.5 51.9 61.8 57.6 32.3

mean 1646 1554 1390 1773 1610 1378

The interesting points are:

(i) Sweden and Germany have similar working hour distributions to the UK, yet in both cases mean annual hours per worker are significantly less. In the case of Sweden this is despite having a higher proportion working more than 40 hours per week and far fewer working less than 30 hours or less than 20 hours. The average German worker works more than 250 hours (i.e. six weeks) less than a UK worker.

(ii) France has many more full time employees and very few working less than half-time, yet the mean annual hours per worker is still significantly less than for the UK.

(iii) The Netherlands has a very evenly distributed working hour distribution and consequently has a very low figure for the mean annual hours per worker.

(iv) Only Italy appears worse than the UK, but this is partly because very few are working less than half-time and more than 60% are working over 40 hours per week.

All in all, this suggests that Britons are indeed overworked.

Finally, Len Shackleton states above: "The vast majority of women and men working part-time in the UK do so from choice (ie they don't want FT work). This isn't always the case elsewhere in Europe."

Really??? What exactly is your evidence for this? Quite frankly it isn't always the case in the UK either!

Cantab - and what is your evidence that it is not from choice? Certainly there are some factors that are important including those imposed by government (such as the bunching around 16 hours due to welfare policy and, as you mention, high housing costs - rather strange that you said we never talked about this issue, we have been talking about it for 40 years). But, what is your evidence that revealed preference is not actually reflecting people's real, underlying preferences? Your data only relate to those in work, of course, which itself distorts the analysis.
I think there's a LFS question on this asked across Europe. The data are well known and both the OECD and Eurostat have commented on this in the past.

@Philip

In response to your statements:

"what is your evidence that it (part-time work) is not from choice?"

and

"But, what is your evidence that revealed preference is not actually reflecting people's real, underlying preferences?"

The implication from these statements is that you appear to believe that employers are only offering part-time work because of the overwhelming demand for such work from employees, and that alternative full-time work is always available for those rare few that demand it. This is clearly fallacious on a number of counts.

(i) It assumes that in any negotiation between employers and employees over terms and conditions it is the employees that hold all the ace cards. That implies that there are more unfilled vacancies than unemployed job-seekers. Well that is hardly credible, is it?

(ii) It assumes that the type of jobs on offer is dictated by consumer choice, with the employee playing the role of the discerning consumer.

(iii) It implies that employers would be just as willing to upgrade any job from part-time to full-time if they happened upon a potential employee who bizarrely wanted to work full-time. In which case, why do so few job adverts highlight this option if it exists (which it hardly ever does).

(iv) It assumes that a 16-hour week is sufficient to fund most people's lifestyles. There may indeed be a few Surrey housewives who choose to work less than 16 hours a week for a bit of extra pocket-money but they are hardly the norm. Why are so many part-time workers still dependent on additional state benefits? Most people may indeed welcome shorter working hours and more free time, but their practical choices are driven by economic necessity. A full-time job is far more likely to pay the bills than a part-time one.

(v) It overlooks the financial bias in favour of part-time jobs for employers while failing to articulate why employees would also be financially better off working part-time.

(vi) It fails to acknowledge the difficulty that many part-time workers face in stitching together a number of part-time posts in different locations at different times in order to earn sufficient money. Many employers who offer part-time jobs often demand such employees to be on-call 24-7 (without pay) in order to respond to their fluctuating business needs. While this is clearly a case of employers externalising their costs, it also restricts the flexibility of the workers themselves, and hence also reduces their income potential.

As for the bunching around 16 hours, actually it is closer to 10 or 12 hours, and it is driven by employers' exemptions from NICs, not the benefit system. While it is true that there is currently a 16 hr/wk cutoff for claimants, this cutoff is merely the point at which they can no longer sign on and claim JSA. It has little real impact on their financial decision over whether any job will leave them better off or not so it does not encourage them to positively seek part-time work of less than 16 hr/wk. In fact it does the opposite.

Finally, the IEA may have been talking about housing for forty years, but it has obviously been doing so in a barely audible whisper. If you believe, as I do, that the housing market is the biggest driver of wealth inequality and the largest distorter of private investment allocation, then why is it that the word housing hardly ever appears in any of the IEA blog posts or reports? Instead it should be prominent in the discussion of virtually every social and macroeconomic issue. Unfortunately, given that the IEA is such a proponent of laissez-faire free-markets, and that it is precisely these policies particularly in financial services that have caused much of the current mess, I doubt that the IEA has much constructive to add to the issue. But if I am wrong on this, and you do actually agree with some of the proposals I have outlined before to address this problem, then by all means feel free to enlighten me.

Cantab - none of your (i) to (vi) demonstrate your point in any way: they could develop as features of a labour market in which there was lower supply of people wishing to work full time or features of a labour market where there was low demand for people to work full time. My understanding was that there was a feature of the tax credits system for children that encouraged clustering around 16 hours but, in any case, I would not, of course support distortions in the employers' NI system either. Regarding the housing market, it was on the IEA front page only last week. However, you seem to think that what we have to say is only constructive if our authors agree with your own proposals. That is an unusual way to conduct scientific debate, and you are probably right that we have not published work that does agree with your own proposals and, given that is your criterion for judging whether contributions to the debate are constructive, then you would not regard what our authors have to say as helpful.
I think Cantab needs to look at the huge range of circumstances facing people who choose to work full time and mean they don't want full time work - students, those with caring responsibilities, semi-retired people with pensions, actors between jobs, family members within small businesses etc. In the UK such jobs are widely available, unlike in some European countries where regulation and social insurance costs make it uneconomic for employers to offer these opportunities.

@Kris

Oh there are indeed plenty of IEA blog posts advocating liberalising the planning laws, even though most of these proposals look to be unworkable as far as I can see. My issue is with housing bubbles and policies to prevent them. Liberal planning rules are not the answer. Nor is any form of laissez-faire free-markets. Adjustable credit controls are.

Free markets only work efficiently when they are self-regulating - by which I mean that whenever any economy moves or is driven away from its natural equilibrium, market forces will then seek to drive the economy back towards equilibrium. This is the economic equivalent of Lenz's Law. Without it you always get boom and bust. In effect it is the difference between markets that have built-in negative feedback, and those with built-in positive feedback. Those with positive feedback need to be regulated externally. Those with negative feedback don't. Housing is a market with a positive feedback loop.

If a housing bubble is a 'market failure', then why don't ALL economies experience them? Have a look here: http://www.economist.com/blogs/freeexchange/2010/10/global_house_prices There are places were house prices have been constant in real terms for ages.

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