Deborah Stone says in her classic book Policy Paradox: The Art of Political Decision Making. The art of political decision-making), which the first challenge in public policymaking is defining the problem. As Stone points out, depending on how we define the problem we will identify the solution.
The great success of the 3 meps who have promoted the initiative to reduce the working hours was to assert with political and substantive authority something difficult to challenge: the 45-hour day is very long, it creates productivity problems, it has been left behind in most developed and civilized countries, affects the stability and well-being of families, affects crime levels and their reduction is made possible because new technologies have the potential to achieve strong productivity gains.
Faced with this definition of the problem, the Government’s response (beyond payaseos: 41-hour counter-proposal; positive impact of 41-hour reduction and catastrophic at 40), entrepreneurship and some naive was to shift the playing field towards how quality public policies should be formulated. What better way to avoid the debate than to start talking about something else? In any case, this strategy is not new. If there are no good arguments against an idea, the best answer is disqualification.
It is not true that there is not enough debate, nor that with a couple more studies it will be possible to know the consequences of change, because because of the magnitude of the transformations involved, it is not possible to size the costs or the benefits. That is why what is at stake is a political decision that from what we say below is possible to make.
No one can deny that the debate around the legal extension of the working day is a problem far exceeding economic analysis. A reasonable debate should involve sociologists, psychologists, political scientists, experts in labour medicine and citizenship. In the mainstream media, however, some economists are taken into account. Less coverage gives studies of economists who have a position in favor of the measure (see for example the study of Ramón López and Javiera Petersen, The 40-hour project and the effects of labor reduction in Chile, August, 2019).
How to analyze public policies?
What are the characteristics of good public policies in democracy? David Bravo, in a column in El Mercurio, points out that there are three: that they are based on evidence, that under conditions of uncertainty they can be applied gradually and with a strategy that allows to rigorously evaluate their impact and that consider the vision of the actors involved, through a social dialogue.
From the point of view of public policy analysis, Bravo’s article has several problems: first, it does not wonder whether the current situation is appropriate or not. Has the author been concerned with analysing the social, economic, crime and productivity problems generated by the current situation (or in technical terms the situation without a project)?
Second, it notes that the basic background has not been analyzed. What relevant background do you refer to? Different specialists have made clear the family, social, criminal, psychological problems generated by the current long day of work, to which it is added that, as a result of urban segregation, travel times are endless. Or does the analyst consider these “basic backgrounds” not relevant?
Third, the analyst does not distinguish between public policies that radically transform a country’s general conditions and PPs that introduce marginal or small changes. While the latter support a simple cost-benefit analysis, the former transform to such magnitude the conditions of a country or area of activity that it is not possible to assess its costs and benefits, as both are unknown. This is what characterizes a political decision as opposed to a lower-scope public policy decision.
The fundamental question to answer is: what working day does the country want? And on that basis we will have to restructure what we do and how we do it. In terms of evidence, we have that the previous reduction did not cause catastrophes and that it goes if the countries that have the shortest working hours (Netherlands, Denmark, Norway, Switzerland, Germany, Australia, Sweden, Ireland) do well. The discussion is open as to whether the reduction in working hours was the result of workers’ struggle, which generated strong incentives that led to productivity gains and explain the current well-being of those countries or vice versa.
It is likely that when the possibility of banning child labour began to be discussed in the world, Bravo’s approach would have led to the refusal, because it allegedly affected the competitiveness of many companies. Another very different thing is the debate around the necessary graduality, the support that small businesses require in the transition, etc. Finally, Bravo ignores the long-running debates the country has been taking about the working day.
Reducing working hours as an economic problem
Its analysis of the economic problem involved is also problematic. While it is true that change has important economic consequences, its analysis is partial. It focuses only on impacts, presumably negative and not on positive dimensions. We’ve already pointed out the non-economic impacts. From a strict economic point of view, it is essential to include other elements.
1) It is true that the conjunction of the eventual introduction of the employer’s contribution to the forecast and reduction of working hours will be a major challenge to business activity. Therefore, reasonable graduality is key. But its negative impact will be much less than expected by some economists by different effects that Bravo does not analyze, in particular, the effects on the increased productivity of smaller working hours, the incorporation of new workers so far unemployed, etc.
2) Chile’s economy suffers from low productivity and its growth rate has fallen substantially over the past 10 years. This is associated with low investment rates coupled, in turn, with low wages and long working hours. A better-paid workforce (by reducing workday without a reduction in wages) will force companies to make a greater investment effort, resulting in higher productivity and therefore better wages. It is clear that many small businesses may face problems in the transition, but in that case the state can play a key role in supporting its modernization effort.
3) There is consensus that the rapid and widespread technological revolution allows for an unprecedented rise in productivity. That means it is possible to generate the goods and services we need by spending less time on paid work. The fundamental problem we face as a society is not whether we can move forward in that direction, but how we are going to distribute the benefits generated by new technologies.
So far the profits are captured by the big companies. Democratic control has the right task of generating a better distribution of these benefits. Therefore, a law like the 40 hours without reduction of salary helps in that direction. To ensure a better distribution of benefits and costs, the other fundamental requirement is the strengthening of the trade union organization.
The content poured into this opinion column is the sole responsibility of its author, and does not necessarily reflect the editorial line or position of El Mostrador.
