From testimony by Andrew Sharpe, CSLS Executive Director given to the Senate Standing Committee on Banking, Trade and Commerce hearings on productivity, May 11, 2005, Ottawa, Ontario Six Policies to Improve Productivity Growth in Canada:
Finally, the sixth policy I would like to put forward to improve productivity is the reduction of working time. The United States is the leading country in the world in terms of technologies. But it does not enjoy the highest level of productivity defined on an output per hour basis. A number of European countries, including France, have higher levels of labour productivity. Why is this the case in France? There are two reasons. First, France has adopted a number of policies (e.g. high minimum wages) that keep less productive persons out of employment, raising productivity levels through a composition effect. Second, the French work many fewer hours per year than North Americans. While this has a negative effect on output per worker, it has a positive effect on output per hour worked, the true measure of productivity A person who works 35 hours a week rather than 40 tends to be more productive on an hourly basis. The worker will be less tired, and more focused as the more limited time available for work will be used more effectively. For example, less time will be wasted on meetings. One of the effects of the 35 hour work week legislation in France (which has recently been modified) has been to increase productivity, even though the purpose of the initiative was to increase employment.
I am not advocating the heavy-handed bureaucratic French approach to working time reduction. However, actions that reduce working time through longer vacations and more public holidays, whether initiated by government or through collective or individual workplace bargaining, can have two positive effects. First, such policies contribute to economic well-being by increasing leisure. Second, while there is some output and income loss, this is offset somewhat by workers becoming more productive on an hourly basis, the true measure of productivity.
Posted by sandwichman at October 3, 2005 12:15 PM