Despite the prominence given to underemployment, ‘over-employment’ is more pervasive in Australia, writes Professor Mark Wooden, Professorial Research Fellow at the Melbourne Institute of Applied Economic and Social Research.
The Australian Tax Office (ATO) abandoned plans requiring its staff to work 37.5 hours per week following an employee backlash. This would have been an increase of 45 minutes per week, or nine minutes per day, over what’s currently required.
At face value the notion that ATO workers in full-time positions should be expected to work a minimum of 37.5 hours per week seems entirely reasonable. But arguably a more interesting question is just how close this award standard is to the hours Australian workers actually devote to paid employment.
What’s the norm?
While a 37.5-hour work week is the norm in industry awards and agreements, most employed Australians typically work shorter or longer hours. Only a minority of Australians actually report working 37.5 hours per week. This is reflected in data the Australian Bureau of Statistics (ABS) collects from households as part of its monthly Labour Force Survey.
In the public service a 36.75-hour work week, as currently applies to ATO staff, is relatively unusual – 37.5 hours is more common.
Data collected from employers by the ABS indicate that, in May 2016, the average weekly hours of ordinary-time work (that is, not including overtime) for full-time non-managerial adult employees on award rates of pay was 37.4 hours.
This number rises to 37.8 hours for those on enterprise agreements, and to 38.5 for those whose pay is determined by individual agreements.
There’s wide diversity
A great many Australians are employed in part-time jobs. According to the ABS, about 19% of men and 48% of women in paid employment report usually working less than 35 hours per week.
At the other end of the spectrum, a considerable proportion work long hours each week. Around 30% of employed men and 11% of employed women report usual working hours of 45 or more each week.
The available evidence also suggests this diversity in working hours is more marked in Australia than in any other industrial nation. OECD data suggests that the part-time employment share in Australia in 2015 was the third-highest among the 34 OECD member countries.
And, after adjusting for differences in definitions – in other countries part-time employment is based on hours worked in the main job, whereas in Australia it is based on hours worked in all jobs – Australia would almost certainly move to second, exceeded only by the Netherlands.
At the same time, Australia ranks ninth among OECD nations for its share of long-hours workers. This is defined as employees reporting that they usually work more than 50 hours each week.
How many hours do Australians want to work?
The long-term trend in average working hours, however, is downwards. While this trend was halted, if not reversed, in the 1980s and 1990s, the downward path was resumed in the 2000s. Mean usual weekly hours of work fell from 36.9 in 2002 to 35.7 in 2016.
This has been driven by both continued growth in the share of part-time employment and a decline in the share of people working long hours. Very little if any of this decrease is due to any decline in agreed full-time ordinary hours of work.
Another important feature of working time is the extent to which hours worked are consistent with worker preferences. In recent years, for example, underemployment has increased. Underemployed workers, as measured by the ABS, now represent about 9% of all employed workers, compared to less than 3% in the late 1970s.
Similarly, concerns have long been expressed about the potential adverse consequences of the encroachment of work time on family and personal time.
According to data collected in 2015 in the HILDA Survey, about 16% of all employed persons would prefer to work more hours each week and about 26% would prefer to work fewer hours. As expected, the proportion seeking more hours is highest among the part-time employed (about 33%), while the proportion seeking fewer hours is highest among long-hours workers (about 50% of those reporting working 45 hours or more per week).
Thus, despite the prominence given to underemployment, “overemployment” is more pervasive in Australia.
But not all of those seeking more hours desire full-time work, nor do all of those seeking fewer hours desire a job offering that would traditionally be described as standard hours – a 35-to-40-hour work week.
The proportion of the employed workforce that prefers different working hours (either more or less) in the range of 35 to 40 is just 15%.
While the working hours of many Australians are not in line with their preferences, the proportion of workers who both prefer more or less hours and prefer a standard work week is not large. The Australian labour market thus appears to do a relatively good job of accommodating the preferences of the majority of workers.