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The difference a year makes

Sun, 18th Apr 2004

AS EVERYONE knows, the British work the longest hours in Europe. And they are getting longer: the average working week in 2003 was 39.6 hours, 40 minutes longer than it was in 1998, according to a CIPD survey last year.

Altogether, 26 per cent of Britain's workers - nearly 4 million - now work more than 48 hours, the maximum allowed by the European Working Time Directive without an opt-out, compared to only 10 per cent six years ago. Nine per cent work more than 60 hours.

Working such long hours comes at a cost. Most respondents in the CIPD survey noted harmful effects on performance, including making mistakes, taking longer to finish a job or not doing it so well. More than 25 per cent said they had suffered physical or mental ailments as a result. Many claimed their relationships suffered, too. There is good evidence that long hours and lack of flexible working options are significant contributors to stress, which costs industry pounds 370 million a year.

Since, as the saying goes, no one goes to their grave wishing they had spent more time at the office, why do we do it? The short answers are 'pressure of work' and 'because we always have'. But, like many other aspects of British employment relations, these are just trap doors to other questions, all of which lead back to the vexed issue of productivity: is the propensity of workers to work long hours a competitive advantage ('flexibility') to be preserved at all costs, or a symptom of British management's inability to organise people to work smarter?

On the test issue of the moment - whether Britain should retain the ability for individuals to opt out of the Working Time Directive's maximum of 48 hours - opinions at first sight divide pretty much on market lines.

Employers, supported by the Government (and a House of Lords committee), want to keep the opt-out for flexibility and competitiveness, while the TUC is waging a campaign to abolish it. Britain's long hours are a symptom of bad management and poor productivity, it argues ending the opt-out is the only way of beginning to shift Britain's per vasive long-hours culture.But the polarity between positions may be less extreme than it appears. For example, although it supports the opt-out, the EEF, the manufacturers' association, believes that the need for it will be substantially reduced if the regulations automatically allow for hours worked to be averaged out over 52 weeks.

That sounds technical. But what it implies is that companies should start thinking in terms of annualised hours contracts for staff - which just happens to be one of the most potent ways advanced companies have found of planning their use of resources better, to the benefit of employees and productivity.

In a 2002 report, Professors David Bell and Robert Hart of Stirling University found that in companies that had adopted an annual hours cycle, workers were 13 per cent better off and did less than half as much overtime as those working conventional hours. Annual hours were often used to improve plant efficiencies in companies that experienced volatile and unpredictable demand. Blue Circle Cement, BP Chemicals, Tesco, Zeneca and Gleneagles Hotel have such systems in place.

'Flexibility comes in different guises,' notes Bell. 'One is the traditional employer-driven spur-of-the-moment variety the other is by agreement and consultation, as with annual hours. It's not hard to think which would be more appealing to employees.'

David Yeandle, deputy director of employment policy at the EEF, has no problem with this. 'Absolutely. Annualised hours contracts do provide more flexibility of the kind companies need.' The EEF provides guidance for companies wanting to set them up.

So why aren't more companies moving in this direction? At the moment, for all its attraction only a small minority of companies have done so. One reason is that the high set-up costs: it may take two years of trial and error and intense consultation to get a scheme up and running, says Mike Sweeney, professor of operations management at Cranfield Management School.

That's hard enough. It may be even harder to get started. Annualised hours are easier to put in place in small firms or where there's a trade union to provide a negotiating point - and unions and collective agreements are diminishing in importance.

Second, Sweeney muses, it may be impossible to do without a measure of trust in the first place. 'How do you get flexibility in the labour force? It's a good question,' he says. 'We have a potential competitive advantage in our labour laws, but firms don't always use it. It could be that it's good relations that enable the essential initial leap.' In other words, only firms that are already good at dealing with employees can move to the next step.

And how many of those are there? This is where hours rejoin the larger management issue. After all, long hours haven't given Britain better productivity, a better standard of living or more effective organisations - rather the reverse. Although Britain often claims to be a wealthy country, wages are lower and purchasing power less than other developed economies.

The truth is that working patterns are complex and ingrained, both symp tom and cause, locked into a much larger employment relations system. If a country's labour market institutions reflect its values, as has been suggested, the prevalence of long standard hours over advanced practices like annualised hours contracts tells its own story.

In Britain most companies are still less concerned with picking up and diffusing new management techniques for improving productivity and competitiveness than with that traditional British priority: muddling through.

The Observer, 18 April 2004


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