Working Time and International Competitiveness KATHERINE HAGEN Working Time FES Briefing Paper April 2005 Page 2 1 Introduction This paper builds on the themes that were highlighted in the roundtable discussion. It is Working time is at the centre of social and intended to facilitate further dialogue on the economic policy in a globalizing world. It is a issues of working time and international com- key element, along with wages and working petitiveness. conditions, for economic growth, an inclusive labour market and high employment rates. It The paper is directed to a review of the ongo- has been, furthermore, an integral element in ing quest for improved national and interna- the pursuit of social justice, specifically in the tional working time policies and the search for context of international standards defining better coherence among them. These chal- basic workers’ rights. Not only was working lenges are typical of the cross-border prob- time the subject of the very first ILO conven- lems between countries, between ministries, tion in 1919, but it has repeatedly been the and between inter-governmental institutions focus of ILO standard-setting initiatives. The that FES is dedicated to addressing. In seeking most basic of these are the Hours of Work a bridge-building role, FES supports a dialogue (Industry) Conventions, 1919 (No. 1) and the on ways that the concept of working time can Hours of Work (Commerce and Offices) Con- be better understood in the context of en- vention, 1930 (No. 30) 1 and 30.1 couraging global and national policy options to respond to increasing international compe- The accumulation of working time standards tition and that are, as a result, more coherent has been an issue of concern to the ILO Gov- across boundaries - but that are also more in erning Body in its review of ILO standards. tune with the needs of both social justice and Recent proposals to update the basic conven- economic well-being in today’s global econ- tions, however, have been entertained, but omy. the Governing Body has not yet agreed to proceed with an actual revision. The Govern- Among the significant features of the current ing Body did decide that they should be re- working time debate are the long-term viewed, and the two main conventions (Nos 1 downward trends in average working time in and 30) are the subject of the 2005 General industrialized countries, the changing mix of Survey for the ILO Conference by the ILO what is meant by full time and part time work, Committee of Experts on the Application of the “flexibilization” of working time and the Conventions and Recommendations. 2 The effect of changes in the organization of work. Committee recommends a consolidation into These are features of the current debate that one new standard. are prevalent in the way that working time is evolving in modern economies. This paper is part of a project being carried out by the Geneva Social Observatory and On the other hand, the emerging integration funded by the Friedrich Ebert Foundation to of developing and transitional countries into a look at current trends and policy challenges globalizing economy has contributed to an- dealing with working time. The project was other set of counteracting trends. Not only are initiated with a preliminary roundtable discus- working time practices in these countries sion in November 2004 to explore diverse per- symptoms of a different level of development; spectives from different parts of the world. they are also creating tensions where these different working time practices are contribut- ing to the competitive advantage of develop- 1 ILO, Hours of Work (Industry) Convention (No. 1, 1919) and Hours of Work (Commerce and ing country economies, particularly in the ex- Offices) Convention (No. 30, 1930), at port sectors of these economies. www.ilo.org. Attention in this paper is directed first to the 2 ILO, Hours of Work: From Fixed to Flexible?, General survey of the reports concerning the situation in developing countries and then to Hours of Work (Industry) Convention (No. 1, the situation in industrialized countries. In 1919) and the Hours of Work Commerce and general, the situation in developing countries Offices) Convention (No. 30, 1930), is affected by trade-related monitoring of International Labour Conference, 93rd Session working time practices by external groups 2005, Geneva: ILO (2005), at www.ilo.org (hereinafter referred to as Hours of Work who rely on existing international ILO stan- General Survey). dards (essentially revolving around the 48 Working Time FES Briefing Paper April 2005 Page 3 hour workweek, one day off in seven, and framework as laid out in ILO Conventions No. some form of paid holidays). While most 1 and 30.4 In both cases, the basic starting countries have laws in place that are consis- point is the description of regular working tent with these standards, there are pressures hours as constituting a maximum of 48 hours related to inadequate enforcement capabilities per week.5 The standards varied on other as- and non-compliance in certain export-oriented pects, such as when you could waive the limit sectors. In addition, there is concern about the to make it 56 hours for a regular workweek, limited nature of coverage, particularly in and also as to when one could implement a terms of the extensive informal economy in 10-hour day as opposed to a limit of an 8- most developing countries. These conditions hour day. These variations notwithstanding, have led some to argue that existing interna- the general rule has been to expect develop- tional standards may not be relevant for coun- ing countries in today’s world to strive to tries that are still struggling to develop. A achieve a 48-hour workweek as the estab- prime example is found in some recent publi- lished frame of reference. This is so, even cations and programmes of the World Bank, though the typical workweek in industrialized which have called these standards as too re- countries is understood to be no more than a strictive and not conducive to a favourable 40-hour workweek, with many industrialized investment climate in developing countries.3 countries having limits that are even lower (e.g. France at 35 hours). The pressures in industrialized countries, on the other hand, are related to the pressures The Origins of the Focus on the 48-hour that are reversing the downward trends in Workweek for Developing Countries working time, as illustrated most recently by the changes in specific bargaining agreements The 48-hour workweek target was not neces- in Germany and in amendments to the 35- sarily articulated as such in any official docu- hour workweek in France. These reversals are ments, but it has been interpreted in numer- largely attributable to the pressures of inter- ous settings to be the accepted norm. The US national competition and signify the increas- took the lead on this by introducing compli- ingly vulnerable nature of domestic policies ance with a set of internationally recognized for reducing working time in order to stimu- labour standards as a precondition for its late job creation to the competitive dynamic Generalized System of Preferences (or GSP 6 of productive workers elsewhere being avail- system) in its trade law starting in 1984. The able to work longer hours – and at less pay law referred to five categories of workers’ per hour, too, of course. But the reversals are rights – the right to freedom of association, also part of a larger phenomenon in many the right to collective bargaining, no child la- industrialized countries toward increases in bour, no forced labour and “acceptable” working time in certain sectors while de- conditions of work. This last category was creases are occurring in others, thereby in- creasing the working time gap. Then there are 4 ILO Conventions No. 1 (1919) and No. 130 the many ways in which working time ar- (1930), the texts of which are available rangements are being diversified. All of these at: www.ilo.org/ilolex/index.htm. trends are detracting from the relevance of 5 Convention No. 1 states, “The working hours existing workweek and workday standards of persons employed in any public or private and call for an entirely new approach to the industrial undertaking or in any branch thereof, other than an undertaking in which only regulation of working time practices. members of the same family are employed, shall not exceed eight in the day and forty- 2 Trends in developing countries eight in the week…” Convention No. 130 says, “The hours of work of persons to whom this In developing countries, the typical standard Convention applies shall not exceed forty-eight on working time is the original regulatory hours in the week and eight hours in the day, except as hereinafter otherwise provided…” 6 A summary of the US Omnibus Trade and Tariff 3 World Bank, International Finance Corporation Act of 1984 may be found and Oxford University Press. Doing Business in at: www.dbtrade.com/legal_sources/ 2005: Removing Obstacles to Growth. crs_summary_tt_1984.htm Title V of this Act Washington, DC: The World Bank (2005). addresses the issue of workers’ rights. Working Time FES Briefing Paper April 2005 Page 4 specifically meant to include “acceptable” cerned about no child labour and no forced minimum wages, working time and occupa- labour, and many of them also pushed for tional safety and health. non-discrimination principles as well. The main point, however, is the “disconnect” be- Although Congress did not further define tween conditions of work standards in con- what it meant by acceptable conditions of sumer-driven codes versus their absence in the work, and thus did not legislatively enact a official identification of core labour standards definition of acceptable working time, the – and the inclusion of the right to association term “acceptable working time” came to be and bargaining in the core standards and their defined as a 48-hour workweek, along with a absence in more voluntary, consumer-driven 24-hour rest period every 7 days, overtime pay codes.