03 May 2014

Decreased Working Hours Not For PHL

Working Time
If the French can do it, why can’t we? Most probably because some Filipino feels that to avoid becoming a slave to your work, then you should become a slave driver to your employees to stimulate growth.

When France approved the new labor agreement that deemed all work-related emails after 6:00 P.M. are unlawful, local labor groups thought of lobbying for the same measure in the Philippines as well. Unfortunately, this is not viable at this time.

If the same measure is adopted by the country, millions of employees and hundreds of companies in manufacturing, technology, service and consultancy sectors will suffer. Economic foundation geared toward increasing local production and fueled by the engine of labor-intensive industries will most probably collapse and bring the country back a few years behind.

There are theoretical arguments that can form the basis for a positive effect on employment in response to a reduction in working time. For instance, if prices are fixed, workers’ and employers’ behavior remains unchanged, less work for some must create almost tautologically more work for others. However, this argument rest on strong assumptions that appeared counterfactual.

The econometric studies show little or negative effects on employment in Germany (Gruber and Wise, 1999). Only a set of simulation studies predicts a positive employment effect – however, they also appear to rest on counterfactual assumptions.

The reduction of working time has provided German workers with more leisure during, and a longer retirement after, working life. There are also no signs that German workers have suffered from income losses due to reduced working hours, given output.

However, there is little evidence that a reduction in working time has reduced unemployment, while there is some evidence that it has reduced output and thus macroeconomic growth. There is no reason to believe that the underlying assumption will change in a way that will make these conclusions less relevant in the future or to a country like the Philippines.