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Delighted to see @CPSThinkTank's research on front page of @thetimes today - we've attempted to measure the impact of Labour's four-day week on the public sector, and the answer is basically 'eeek' (1/?) thetimes.co.uk/edition/news/g…
For those not already familiar, @johnmcdonnellMP promised at Labour conference that over the next decade, we would move to a 32-hour average week, ie four days vs five. He also commissioned @RSkidelsky to write a report, which can be found here progressiveeconomyforum.com/wp-content/upl…
It's obviously impossible to put a precise figure on this, given that they're saying it would happen in a decade's time. But if you tried doing it today, the cost to the public sector would be £45 billion - or the equivalent of 10p on income tax.
There are two ways in which this kind of thing might pay for itself. The first is if working shorter hours causes people to be more productive. The second is if the public sector as a whole becomes more productive over that decade, and you funnel the gains into shorter hours.
Does the first option stack up? Nope. As Skidelsky says, higher productivity is historically associated with shorter hours. But there's v little evidence that the relationship/causation works the other way around.
And there's virtually no evidence of that happening in the public sector in particular.
Still, we've been very generous indeed and assumed that by getting people to work four days rather than five, they'd be more productive during those four days - a proposition for which, as I say, there is not much support in the literature.
But even applying the most heroic productivity multiplier, you still end up with a cost to Government of £17 billion on current figures, or 4p on income tax.
This is roughly equivalent to the £15 billion that @PJTheEconomist estimates in the Times - though as he says (and we'd completely agree), it's impossible to be specific over a decade-long horizon
(And all this, of course, is without considering the cost to businesses, which absent productivity gains would also have to either pay people the same to do less work, or hire more staff.)
Now, Labour have (predictably) dismissed our estimates and said that they would make the economy so much more productive that we would easily afford this.
But this - and you'll be shocked here - doesn't actually make sense.
The @ONS says that public sector productivity growth over the last 20 years (1998-2016) has been just 0.2% ons.gov.uk/economy/econom…
@ONS Unless Labour can miraculously make the public sector enormously more productive, it's hard to see where a 20% gain in productivity/cut in hours is going to come from
And as we've shown in other @CPSThinkTank analysis, productivity in eg the NHS is inversely correlated with extra spending, ie efficiency tends to fall as funding rises cps.org.uk/research/ons-a…
So if Labour can simultaneously whack up spending, keep the unions happy, and wring more productivity out of the workers it will be impressive to say the least
But even if we assume these historically unprecedented public sector productivity gains, there's a dilemma here. Because in order to cut the workers' hours, those gains will have to be channelled towards that - rather than improving public service outputs.
In other words, if a doctor/teacher/civil servant improves their output by 10%, they'll get to cut their hours by 10% - while the quality of the public services they deliver will remain static
The Skidelsky paper actually looks at some of this. It points out that the public sector has been really crap at embracing technology, so there's scope for higher productivity via increased automation (though tell that to the unions...)
But it also accepts that some sectors, like health and social care, are likely to deliver lower productivity gains because they're about people-to-people interactions not sitting at computers.
It also points out that when France tried this, by introducing the 35-hour week, it caused massive problems in hospitals because there weren't enough staff...
In summary, cutting a five-day week to a four-day week sounds really nice. It certainly keeps the trade unions happy.
But it is also extremely likely to involve either very significant tax rises or spending cuts to pay the extra staff costs - or see public services stagnate because the Government prioritises cutting staff hours over delivering better public services...
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