Renewed Push to Regulate Overtime is Overkill

By Mark Wooden

The Australian,
13 March 2007, p. 14

Let's not overreact to reports on Australians' long working hours, advises Mark Wooden.

Two recent reports, by the Human Rights and Equal Opportunity Commission and by Relationships Forum Australia, have reignited interest in the issue of working time; in particular, how long and unsocial working hours impinge on family and leisure time.

The HREOC report, It's About Time, describes the issue of work-life balance as "the biggest challenge facing Australia in the 21st century". Relationships Forum Australia uses more colourful language, arguing that changing working patterns are associated with family breakdown; hence the title of its report: An Unexpected Tragedy.

The aspect of this debate that receives most attention, at least in the media, is the large number of hours many Australians appear to be working.

Labour Force Survey data from the Australian Bureau of Statistics, for example, reveal that, in 2006, about 17 per cent of Australian workers report usual working hours of 50 or more per week (widely used as the cut-off to distinguish long hours of work). Interestingly, this figure is considerably below the 22 per cent figure reported by Relationships Forum Australia for 2000, in part because a trend away from long hours of work has been taking place in recent years.

Nevertheless, it remains true that compared with many other Western nations, especially many European nations, the incidence of long hours working is comparatively high in Australia.

But should we be introducing regulatory policies aimed at limiting the number of hours that workers can work, as is recommended by Relationships Forum Australia?

In my opinion, the case for active regulatory intervention is extremely weak. First, many of the people who regularly work long hours will almost certainly fall outside the scope of most regulation.

Most obvious here are the self-employed who, according to data collected in the 2005 round of the Household, Income and Labour Dynamics in Australia Survey, represent almost one-third of all persons working long hours. Quite clearly, these people have determined, rightly or wrongly, that long hours of work are required in order for their business to succeed.

Then there are managerial employees; about 16 per cent of all long hours employees are classified as managers. Surely this is a group for whom hours regulation is unlikely to bite?

Second, even if we exclude the self-employed, more than half (52 per cent) of the remaining employees working long hours state that their preferred weekly hours of work are 50 or more. In other words, for many people long hours of work are not imposed on them by uncaring employers, but are actually the result of workers exercising their preferences.

Third, many of the jobs held by these long hours workers have other characteristics which are very attractive. Many, for example, are well-paid, highly secure jobs that provide workers with considerable control over their own working situation.

Fourth, if it is the effects on family that we are most worried about, then surely that means we should not be concerned about the long hours being out in by workers who are single and childless. More than one-quarter of those working long hours are single people without children.

Finally, and perhaps most importantly, the evidence to support the case that long working hours have detrimental effects on family relationships is very weak.

Studies of the HILDA Survey data done by researchers at both the Australian Institute of Family Studies and the Melbourne Institute, for example, show there is little difference in the wellbeing and family functioning between persons working long hours and those completing standard working weeks.

Relationships Forum Australia, however, goes much further. It contends that long working hours is one of the root causes for the rise in divorce rates.

Its only support for this claim appears to be the supposed correlation between trends in long hours working and divorce rates, but correlation does not establish causation. Indeed, surely it is just as reasonable to claim that long hours of work are a response to marital separation? One way of getting a better (but still far from perfect) handle on this issue is through longitudinal data that enable us to identify what people were doing in the period prior to divorce.

The HILDA Survey is such a data source. Preliminary analysis of this data suggests little obvious pattern between long hours working by married men and the risk of a subsequent marital separation.

The idea that work-life balance is really the biggest challenge facing Australia in the 21 st century is, in my opinion, nonsensical.

Surely most of us can recognise that there other far more serious problems confronting Australia.

More importantly, time poverty is the sort of socioeconomic problem that we should welcome; it is the result of rising income and wealth and the increased life choices that economic prosperity brings.

Increased choice, however, is a source of stress and thus there may be a role for government in assisting people to make choices that are in their best interests.

On this HREOC and I agree. That, however, is different from imposing limitations on how much work can be performed and when it can be undertaken.

Mark Wooden is Professor and Deputy Director of the Melbourne Institute of Applied Economic and Social Research. He is also Director of the Household, Income and Labour Dynamics in Australia Survey.