Tightening the rules for the unemployed - what is behind the debate?

17 November 2017

Simon Theurl

[This article published on Nov 17, 2017 is translated from the German on the Internet, https://awblog.at.]

Public debate is increasingly calling for tighter rules for the unemployed. Since unemployment is due to a lack of willingness to work or to receive benefits, the problem of unemployment could be solved (among other things) by tightening the regulations on what is reasonable for the unemployed. However, behind this benefits discourse or the demand to tighten the rules for receiving unemployment insurance benefits, there is a political agenda.

In particular, the tightening of the provisions on reasonableness would increase the pressure on job seekers, devalue investments in human capital, contribute to low wages and in-work poverty and thus promote the development of a low-wage and low-quality sector in Austria.

Step down: the stigmatization of the unemployed

Unemployment can have various causes, can affect anyone and everyone and is usually a result of economic developments and/or (wrong) decisions of a company management. Nevertheless, some policy makers, experts and journalists engage in a public debate in which they selectively argue that the unemployed are responsible for their own misery. The unemployed lack the willingness to perform. They would rather rest in a "social hammock" because the incentives to work, welfare benefits, etc. are too low. With this argumentation, unemployment is reinterpreted as a problem of lacking willingness to work on the part of those concerned and at the same time linked to the benefits of established social security systems. Once this approach is anchored in the social consciousness, political measures derived from it can also be implemented by consensus.

Against this background, a clear trend can be observed in the OECD countries since the 1980s: Labor market policy measures are becoming increasingly authoritarian and disciplinary. This political transformation of labor market policy can often be observed empirically in times when debates on welfare state cutbacks dominate - if the public opinion takes the view that cuts in the public sector are necessary, cuts in the social sector, which are actually against its own interests, are more likely to be accepted. Thus, the trend in the transformation of labor market policy reflects the restructuring of economic systems: from market-based systems in which welfare state coordination plays an important role to decentralized "liberal" market economies based on the Anglo-Saxon model (e.g. USA and UK).

With regard to the labor market, a transformation from "welfare regimes" to "workfare regimes" has been taking place since the late 1960s. These are labor market regimes in which the receipt of welfare state insurance benefits is dependent on strict legal regulations, e.g. on the willingness to work and, at the same time, on the reasonableness of gainful employment. The receipt of welfare state insurance benefits that secure one's existence is thus tied to the obligation to accept work. If we break down the essential reforms in the area of the labor market, an increasingly authoritarian and disciplinary labor market policy is thus not about creating gainful employment for unemployed people, but about forcing people into jobs that nobody wants to have. This increases the compulsion to accept even poor gainful employment (low wages, poor quality, etc.). Moreover, because of their disciplinary character, "workfare regimes" have an effect not only on those directly affected, but also on all those who observe the consequences of these policies. Not only does this shift the balance of power and the supply of labor in the labor market, but it also increases the risk of unemployment for people in employment. Increased reluctance to make demands on employers (wage increases, compliance with labor laws, etc.) is only one of the possible disciplining consequences of this political development.

In line with this trend, the restructuring of the welfare state is now also being pursued again in Austria. With the innovation that social support is being established through racist "performance" and "fairness" arguments. With the help of the assertion that foreigners did not want to provide benefits or had paid too little into the system and should therefore not receive social benefits, reforms of the unemployment insurance system are now being announced. Carried by this debate, reforms of controversial legal regulations are thus tackled, for example a tightening of the definition of what is reasonable for the unemployed. These reforms are also supported by the general demand for the reorganization ("flexibility") of the labor market, most recently by Agenda Austria, which is financed by industry. This is entirely in line with the wishes of the financiers.

The debate on the willingness to work is therefore not about combating unemployment. Nor is it about the bogus argument of preventing abuse in benefit receipt. Rather, it is an agenda for the reform of labor market regulations at the expense of employees.

More bad work and consolidation of long-term unemployment

The tightening of the provisions for the unemployed, as called for in the public debate, therefore has far-reaching consequences. However, expected success in combating unemployment is extremely questionable. It may be true that cuts in social transfers increase the incentive or the need to work, but at the same time this encourages the development of a low-wage sector and contributes to the phenomenon of working poverty. The consequences of a tightening of the regulations for the unemployed are well known and have been examined in various studies on the effects of Hartz IV, among others. It is evident that labor market policy along the lines of Hartz IV is not a solution, but class struggle from above.

Another aspect is that the public debate on unemployment and unwillingness to pay benefits contributes to the stigmatization of the unemployed. This reduces the chance of unemployed people to find employment and contributes to long-term unemployment becoming entrenched.

Willingness to work and reasonableness

A glance at the legal provisions regulating willingness to work makes this clear. An essential part of this are the provisions on reasonableness. These stipulate which jobs are considered reasonable for the unemployed and are a prerequisite for receiving benefits from unemployment insurance.

The statutory provisions state, among other things, that employment is reasonable if it is appropriate to the physical abilities of the unemployed person, does not endanger his or her health and morals, is remunerated in accordance with the provisions of the applicable collective agreement and can be achieved within a reasonable period of time (Section 9 AlVG).

In addition, occupational protection applies for the first 100 days. This means that an activity is not reasonable if it makes future employment in the previous occupation considerably more difficult. This is intended to make it more difficult to make the transition from skilled worker to assistant. Furthermore, in the first 120 days, wage protection applies in the amount of 80 percent of the last wage (used for the assessment basis). After the above-mentioned periods, job seekers are forced to apply for all the jobs on offer anyway and, if necessary, to accept them.

Consequences of a tightening of the provisions on reasonableness

The debate about the willingness of the unemployed to work - carried by the racist discourse about migrants and asylum seekers who would not provide benefits - legitimizes legal changes that lead to a shift in the balance of power on the labor market. This has direct effects on the labor market, on employment opportunities and thus also on the Austrian economy.

Willingness to work is a prerequisite for receiving benefits from unemployment insurance. Stricter reasonableness provisions for the unemployed thus increase the pressure to accept poor work and force work in the low-wage sector, regardless of qualification and experience. This encourages the development of a low-wage sector and leads to an increase in in-work poverty.

Tightening the rules on what is reasonable for the unemployed devalues professional experience and investment in human capital. In the current situation, occupational protection is only available for a period of 100 days. The consequence of invalidating these provisions would be that the risk of not being able to find gainful employment appropriate to the training would increase. Existing expertise would thus be lost and devalued. The incentives for companies to fall back on existing expertise and rely on knowledge-intensive production would be reduced, because for activities that do not require prior knowledge, the supply of labor would increase and prices (i.e. wages) would fall. This would also encourage the development of a low-wage and low-quality sector.

The transformation of the coordinated market-economy system from "welfare" to "workfare" has a disciplinary effect on all those who observe the consequences of the system (i.e. on all workers) and generates fears of relegation, i.e. indirectly affects those who are not directly affected by it. In Austria, dismissals are possible without further ado. The risk for employees to be dismissed by employers is thus accompanied by increasing costs for the employees. At the same time, the costs for employers fall, because the "workfare regime" keeps workers available.

What should be done instead

Unemployment is a burden for those affected and has its causes in economic cycles and crisis phenomena. In order to be able to implement (labor market) policy that makes sense politically, the value of solidarity must be anchored in public debates. A clear demarcation from the racially charged debate on benefits is indispensable for this.

Instead of tightening the regulations for the unemployed, there is a need to expand investment-based active labor market policies to improve human capital, as well as training and further education (with the aim of achieving good employment conditions) and adequate wage replacement and social benefits. These measures can help to combat in-work poverty and integrate people into good employment.

The economic expansion in which Austria finds itself makes it possible to increase employment. Proactive measures such as Action 20,000 make it possible to specifically counteract a consolidation of long-term unemployment - this action should therefore be continued with vigor. A sustainable fight against unemployment must be achieved by means of a sensible economic policy. Instead of stigmatizing the unemployed, we need a prosperity-oriented economic policy that gives the goal of full employment and good work an appropriate status.

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Less is more - a plea for short full-time

21 January 2020

Beate Finch

[This article by Ms. Beate Finch published on Jan 21, 2020 is translated from the German on the Internet, https://awblog.at.]

In Austria, the maximum working time was increased to 12 hours per day and 60 hours per week in 2018. But social and economic necessities point in a completely different direction. A reduction in working hours towards a short full-time work schedule would meet the wishes of the majority of employees, studies from Germany show. Moreover, it would contribute significantly to a more gender-equitable distribution of work and support sustainable economic activity.

Reducing working hours enables the gender-equitable redistribution of all work

Not only the world of work is in a constant state of change. Private life is also changing and increasingly demands greater presence and attention. The compatibility of family and career is the central theme of working time organisation. Eight out of ten companies in Germany now rate family friendliness as important or rather important in its own right, according to the German Federal Ministry for Family Affairs in its "Unternehmensmonitor Familienfreundlichkeit" (Company Monitor Family Friendliness).

A study published in 2017 by the Bremen Chamber of Employees states that almost 90 percent of men in dependent employment in Bremen work full-time, a large proportion of them with more than 40 hours of real working time per week. Only 46 percent of women work full-time, more than half of them work part-time. This corresponds to the nationwide trend. A study by the Hans Böckler Foundation from 2014 shows that almost every second female employee, but only every tenth employee, does not work full-time. 3.4 million women are employed exclusively in mini-jobs, which means that they do not receive any social security cover from employment. It is interesting to note that Germany, with an average difference in weekly working hours between men and women ("gender time gap") of 7.7 hours per week, is well above the EU average of 5.7 hours, while Austria is slightly higher at 7.9 hours (see graph).



Scientific studies also show that the gender time gap increases after the birth of a child: On average, men work more after the birth of a child than before, women work much less. The reasons for this include tax policy in Germany, the lack of partnership-based child rearing and the very low take-up of parental leave by fathers.

The average working time for a full-time job in Germany is 41.3 hours per week, which is far above the provisions in the collective agreements. Within the framework of the employee survey "Koordinaten der Arbeit im Land Bremen" (Coordinates of Work in the State of Bremen) published by the Bremen Chamber of Labor in 2017, employees were asked about their contractual and actual working hours, among other things. This revealed that employees regularly work more than three hours more than contractually agreed. Transport/logistics, the hospital sector and the hotel and catering industry are the sectors in which overtime of more than six hours occurs most frequently. The proportion of men working between 31 and 39 hours has been steadily declining since 2003 and is currently below 25 per cent.

Many fathers today, however, want to experience the first precious moments in the lives of their newborns and concentrate fully on the family. The change in values from job to family is there, but it has not yet arrived in the working world. "We don't have time for so much gainful employment, we have more important things to do," says one of my colleagues again and again when it comes to the fact that gainful employment is just one form of work alongside others and that other forms of work such as care work or voluntary work should also have their place.

Redistribution of working time in line with the wishes of employees

Interesting results are also contained in a study published in 2017 on behalf of IG Metal, in which union and non-union members were asked about their working time preferences. According to the study, the majority of women would like to work 29.5 hours per week, previously known as "long part-time". Men, however, would prefer 35.5 hours per week. Other surveys also show that the majority of women would like to work more and the majority of men would like to work less. What is particularly interesting is that the women interviewed in the study are clearly in favor of a shorter full-time week, which could enable them and their partners to enter working life equally and still not have to neglect their private lives. However, the economic and political framework conditions promote full-time work for men and a complementary part-time work for women.

When it comes to the question of how many hours a short full-time job should comprise, there are different models and ideas. Here I would like to endorse the model of the 30-hour week, as originally proposed by Helmut Spitzley, the late Professor of Labor Studies at the University of Bremen, and which is now being advocated by a number of NGOs such as Attac or the initiative "Reducing Working Hours Now". Interestingly enough, 28 to 30 hours per week correspond pretty much to the working time wishes of working parents.

In the meantime, there is also some movement on this topic in the German trade unions, and there are initiatives for a short full-time work, such as the Ver.di-initiative "Working time reduction campaign now!" or the collective bargaining dispute of IG Metal last year about a 28-hour week with the right to return to "normal full-time work".

A short full time would not only create more equal rights, it would also change the perspective and upgrade other forms of work such as care work or voluntary work compared to gainful employment. Up to now, care work has mainly been done by women, it is often taken for granted and not (sufficiently) remunerated. Social pressure and the state of emergency in the care sector show us that this model is already no longer working. It is also no longer working because young women are no longer prepared to put their careers on hold and bear the financial consequences alone. One reason for this is that society in Germany does not provide financial security for inactivity and does not take it into account to a large extent in pensions either. A short full-time working life would integrate women more strongly into the full-time working world, which would also increase their security in old age.

Reducing working hours is the employment-promoting alternative to economic growth

In addition to the contribution to greater gender equality, there is another central argument in favor of a reduction in working hours in the direction of short full-time work: the increasingly obvious limitations of economic growth based on the exploitation of nature. On the one hand, growth on the scale seen to date is no longer economically feasible: the DIW (German Institute for Economic Research) has forecast economic growth for Germany at 0.5 percent for 2019 and only slightly higher for the following years.

On the other hand, continued economic growth on the basis of today's predominant mode of production will lead to the destruction of our environment, our basis of life. Climate change shows us how quickly a debate about potential future dangers can turn into a debate about concrete threats and dangers that have already occurred if we do not act in time. We don't have as much time as we always thought we would, and we have to act now, as the students show us impressively in their "Fridays for Future" demonstrations.

Sustainable management is based on nature and its ability to regenerate. We must learn and acknowledge this if we want to live and operate in a socially and ecologically compatible manner. The growth on which this system was and is based was and is only possible at the expense of ecology and social responsibility.

The illusion that the problem could be solved within this system with further growth of the gross domestic product still holds true today - it is expressed in the term "sustainable growth". And another illusion is also tenacious: that of full employment through growth. The increase in productivity inherent in the industrial economic system itself prevents it. It is assumed that we need an annual economic growth rate of 4 to 6 per cent to compensate for the increase in productivity and thus maintain the number of jobs.

A short full-time job would distribute the existing volume of work more fairly - without the pressure of having to generate more and more in order to maintain jobs. Economic calculations by the Bremen Institute of Labor and Economics from 2008 (Holtrup/Spitzley 2008) showed that with a 30-hour week the work available to society could be distributed in such a way that full employment could be restored - without economic growth.

Reduction in working hours must be implemented in a socially balanced way

It is therefore increasingly becoming a necessity to think of models of flexibility of working time on the basis of reduced full time and no longer on the basis of traditional full time (which is often far exceeded by overtime). And this must be done in a socially balanced way so that low-income workers are not burdened even more.

A relevant question in this context is whether a reduction in working hours with full wage compensation and full personnel compensation is financially feasible and enforceable. Opponents argue that this would place too great a burden on companies or on the state if it were to bear part of the costs. In general, financing is probably one of the biggest challenges in implementing the model of short full-time work for all. What is certain is that money that would be needed to finance unemployment could be saved. According to calculations of the Bremen Institute for Work and Economy (Hickel 2008), the estimated direct and indirect costs of unemployment amount to 70 billion Euros annually. As far as wage compensation is concerned, the Bremen Working Time Initiative proposes to consider a balanced wage compensation which does not burden the lower wage groups even more, but which certainly provides for co-financing for the higher wage groups. A reduction in working hours for lower and middle wage groups would certainly only be socially acceptable with full wage compensation, since in this area 1.1 million employees throughout Germany are dependent on additional benefits from unemployment benefit ll for their full-time employment.

Conclusion

A short full-time as a new normal working time would redistribute the work volume and would be the condition for women to be able to work to the desired extent to secure their livelihood and career opportunities and for men to be given relevant time for housework and care work. It is the condition for a gender-equitable distribution of all work.

In my view, a reduction in working hours is neither unrealistic nor short-sighted but socially necessary. It is an effective instrument for securing jobs, but also for creating new jobs. And it is an important instrument in a process of social change. In particular, it would make a contribution to the gender-equitable distribution of work by allowing full-time employees, who are predominantly men, to reduce hours and part-time employees, who are predominantly women, to increase hours. Reducing working hours would also contribute to sustainable economic activity, as it would allow us to move out of the growth paradigm and would open the door, especially for the trade unions, to enter the debate on the necessary structural change in our industrial society in a more formative way.

We should get out of the madness of having to produce more and more in order to generate growth, which then - hopefully - leads to more wages and more work. This model has reached its limits. Instead, we need to redistribute consistently, in all areas, and this requires a fundamental rethink. Reducing working hours would be an important instrument of redistribution. Its socially transforming effect should not be underestimated.



Although we now have a declining official unemployment rate, progressive digitization is exacerbating the problem, as it will lead to the loss of jobs on a larger scale - the experts* have different estimates of the magnitude of this. In addition, workers in the lower wage groups and in the low-skilled sector are most at risk of unemployment. Unemployment is a social problem in a country where social inequality is a major concern.