One simple way to save jobs

In the wake of the recent recession, we are urged more than ever to spend, work, make and consume more—not because this cycle has intrinsic value, but because it is claimed our prosperity depends upon it.

However, while Britain's GDP has nearly doubled over the last 33 years, according to the National Office of Statistics our wellbeing has remained static. Worldwide data indicates that beyond around $15,000 per year, extra income does little to improve wellbeing. Despite this, British employees work amongst the longest hours in Western Europe. The costs of this culture are felt in the strain on our health and our social fabric.

There is a way forward, however. At a time when the public sector is set to be reduced, we could minimise job losses by sharing work more equally: scaling back the working hours of employees rather than causing widespread redundancies. A twenty per cent cut in a full-time employee’s hours and pay would help sustain employment and prevent the need to pay unemployment benefits. For every four full-time employees able to cut their hours, a fifth who would otherwise face redundancy could keep their job.

There have been many examples of this in the private sector—temporarily reducing the scale of the workforce while business is slow, rather than laying them off. In the depths of recession in February 2009, Honda closed its UK plant in Swindon for four months, sending home around 2500 staff for two months at full basic pay and at sixty per cent for the remainder. Alongside the shutdown, a voluntary redundancy scheme was taken up by 1300 employees. Upon returning to work, Honda staff worked unpaid overtime to cover the amount they had been paid during the hiatus. There were no compulsory job losses. The example of Honda, as well as similar schemes adopted by other companies such as Jaguar Land Rover and Deloitte, demonstrates that the current spending squeeze could be an opportunity for the public sector to lead a culture of flexible working that suits workers too.

The right to request flexible working is already guaranteed to many parents and certain carers. The Government’s commitment to make this right universal is a good start. However, we could go further, by using the tax system to recognise people's contributions to socially beneficial schemes outside work. After all, in contrast to the lack of fulfilment derived from additional paid work, extensive research indicates that wellbeing, mental health and self-esteem are all improved by volunteering.

Employers who arrange for staff to volunteer in paid time could have the applicable National Insurance contributions paid by the government. Employees who reduce their hours to volunteer regularly could receive a tax rebate. Using the earlier example—a job loss avoided by five people scaling back a day a week—the saving in Job Seeker’s Allowance might be enough to fund a rebate equivalent to tax on any hours switched to volunteering. Volunteers would, of course, need a guarantee from their professional employers that they would not be discriminated against, and their jobs would be no less secure.

Increased flexibility in working hours is a practical policy consistent with the idea that we need to live more sustainably. It is also consistent with our economic circumstances, and the need to constrain public spending whilst protecting employment. Above all, it’s a proposal that prompts us to value the whole of our time.

Duncan Hames, the new Liberal Democrat MP for Chippenham, writes about a new model for sustainable economic growth—which values caring, volunteering and the environment—in an extended essay for a new book by the Social Market Foundation called “Class of 2010”, which features contributions on a range of policy areas from new, high-flying MPs from the three main political parties.