Opinion: Peter Strong on why a four-day work week will increase prices and taxes

Source: Private Media/Emma Bemrose

There is a growing push to have Australians work for four days and still get paid for five. We saw an excellent article from Amanda Rose on what that might mean for small businesses. Let me join the fray.  

The theory is that a person can complete five day’s work in four days so they should be allowed to do so and maintain the same pay. One version is that the employee would still work the same number of hours per week, just work longer hours on the four days. For a 40-hour week, that means 10-hour work days. The other version is that the employee would work normal hours for four days but still get paid as though they worked five. Unsurprisingly, the second version is the one the unions prefer.

One firm which is trialling the four-day week explains it as ‘The approach being trialled is the ‘100:80:100’ model – which means employees will receive 100% of their pay while working 80% of their contracted hours, in exchange for a commitment to maintain at least 100 % productivity”.

The first model can be dealt with quickly – if working 10-hour days is healthy then why do we celebrate the eight-hour day with a public holiday? We would have to cancel that public holiday as out of date. Also, why are there currently penalty rates for those extra hours? Doesn’t this change the whole notion of what is a reasonable and healthy daily workload? Enough.

Now let’s look at the preferred model and see how this would play out. Firstly, for the public sector.

We know that the public service often has customer-facing jobs – including those responsible for vehicle registrations or issuing various certificates needed to run a business or to be a specialist worker. There are also regulators who visit businesses to assess health and safety. How can they achieve in four days what they achieved in five? If they, for example, had a target of five businesses to visit and inspect each day they would have to increase that to six businesses in a day. Is that wise? Would that compromise safety? If it is okay, why can’t they do six now?

Then we have law enforcement. A police officer would work four days instead of five. Will criminals also be expected to only work four days but achieve the same number of crimes they normally achieve in five days? This is of course just being absurd but that is because the idea is absurd. Either way we would need to employ more police officers to cover the extra days and that would increase the wages bill of the government and taxes would have to rise.

The same applies to first responders. Fires and accidents don’t try to fit in with the public service needs. We would have to employ more first responders or cut services by 20%.

Then there are the public servants who write policy and manage programs and contracts. There are also those who service politicians and provide administrative support for others. If they can achieve in four days what they currently achieve in five days doesn’t that mean they have been bludging somewhat? Taking it easy? Malingering? I know a lot of public servants and the great majority don’t malinger or bludge. But the message that five days of work can be achieved in four isn’t a great one for people’s perception of public servants.

“The business model is broken”

Now to the private sector.

Let’s say, as an example, a shop with three employees opens for five days. The customers are not going to change their buying habits to suit the shop – that’s how retail works – you meet the needs of customers. Under this proposal, the employees could work 12 days but get paid for 15. The employer has three days of customer interaction to fill. There would be at least a 20% increase in wages without any possible increase in sales. The business model is broken.

This applies equally to other businesses, most of which stay open on weekends. Their wages bills will increase at least 20% with no increase in sales. That is service stations, pubs, clubs, restaurants, cafes, supermarkets, giftshops and so forth.

When a pub or a club goes to four days with five days’ pay, will patrons be expected to drink in four days what they normally drink in five?

What about the transport sector? Would truck drivers be expected to achieve in four days what they did in five? How? Drive for longer? Drive faster? Both? Get bigger trucks that carry more? None of those solutions are safe and acceptable.

The four-day week would increase prices and increase taxes, or as Amanda Rose points out, the more likely result would be business closures with accompanying job losses or a major increase in prices for all commodities. This means the people working four days and getting paid for five will likely have to get a second job to pay for the price increases. Or they could ask their current employer if they could work the fifth day on penalty rates.

Also, productivity would definitely decrease. 

Who thinks of these things and promotes them as good ideas?

The supporters will state that this has worked in trials. In Australia, five firms are or were in the test run. The firms who volunteered would have a business that perhaps could be shrunk to four days. But isn’t that putting stress on workers? Asking them to achieve in four days what they used to achieve in five. Sounds like they might have been malingerers. 

Why not tell an employee that if they can achieve 100% of their work in three days then that’s okay as well? All very silly. What next? If an employee can achieve a year’s work in six months then they can have the rest of the year off? 

Peter Strong is the former chief executive of the Council of Small Business Organisations Australia.

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