The problem of a continuing economic instability, which is unusual, might not always be a result of weak or wrong policy decisions. But it could be an indication that a given economy is demanding some significant reforms on the part of the existing policies or practices for they are probably exhausted. This is perhaps true especially for the developed countries where the feasibility of economic principles and practices have been almost perfectly implemented and practically proven for years.
A sudden and prodigious failure in any of those long-serving principles and practices should be viewed from a different perspective. Otherwise, as it has been practically seen, taking the usual economic countermeasures might not help combat such extraordinarily challenging problems.
For instance, the ongoing economic instability that has mainly stretched from Europe to the United States (US) has been challenging economists and policymakers since it is almost unresponsive to their economic and policy measures. In fact, sometimes it slightly shows a sign of recovery for short periods of time and then returns to its bizarre situation. Hence, one has to check that whether those happenings could be handled with the existing economic practices or need a new approach to deal with them.
For this reason, economic measures or policies should thoroughly examine the cause-effect relationship between the economic instability and the present time extraordinary political, natural, and socio-economic phenomena. Some of the main incidents that are causing and catalysing the economic uncertainties in the developed economy are technological advancement, migration crisis mainly caused by the rapid growth of the world’s population, poverty, political instability, religious extremism, climate change and globalisation.
But it is evident that each of the phenomena is not equally aggravating the economy. For instance, while countries are struggling to tackle their domestic unemployment issues, migration crisis is worsening the situation by bringing a staggering amount of new job seekers to their economy.
And technology, because of its higher level efficiency of production, is dominating employment opportunities over human labour and thus exacerbating the issue of unemployment. Hence the two forces alone could jeopardise the economy’s effort to maintain the equilibrium level of employment as they clear job opportunities with speed much faster than the economy’s pace to create them.
But it is unthinkable to decline from using technology for the sake of saving job opportunities. It is likewise impossible to stop the rapid growth of the world’s population at once or solve the migration crisis overnight. Therefore, there should be a new economic approach or reform which can help upgrade the capacity of the economy to the level where it can entertain and give enough space to the stated phenomena.
Otherwise, as it is being observed, though countries are taking different economic measures such as austerity, bailout, monetary and fiscal policy reforms, along with some structural changes, it has been far from long-lasting. Because of that extraordinary nature and pattern of the economic crisis, it is apparent that a new approach is needed to reduce the causes of the problem.
As the growth of an old tree is encouraged by cutting off the overgrown, weak and dead parts of its branches, some of the long-serving parts of the economic practices need some pruning as well. Here, there has been a long-serving, not to mention basic, economic practice that needs to be revised and reformed so that both human labour and technology will have a wide enough space to play their roles in the economy.
And that is reforming the eight-hour workday. The eight-hour workday has been exhausted to serve the developed economy mainly because of the influence of the current population size, migration crisis, technological advancement, and the stage of the economic development.
A six-12-hour work day would be a better fit which is composed of two sorts of working hours. The regular working hours for workers would be reduced to a six-hour workday and a thirty-hour workweek. In the same token, the regular office hours for firms and organisations would be a sixty-hour workweek and a twelve-hour workday which is composed of two shifts that consist of six hours.
Employers would thus gain additional four working hours in a day or twenty hours in a week. In addition to this, firms which have the tradition of working for twenty-four hours a day will gain an extra shift time of work which consists of six hours. In this manner, there will be four shifts a day. Employees will have two additional hours of leisure time in a day and ten hours in a week. Indeed, the replacement would require wage and labour reforms.
Six and twelve hours are selected out of different possibilities because they are factors of twenty-four. They simply help to have equal parts of the twenty-four hours of a day when arranging the regular office hours, shift works, and overtimes.
With the reform of the working hour, wages also need adjustments and, for that reason, a coherent strategy should be designed. As a result of the wage adjustment, the labour market would be the most affected part of the economy. For this reason, the effect of the reform would ultimately result in a shift of the labour market equilibrium. Similarly, during the reform, various economic changes are expected. For example, the economy would adjust itself to its real value in the form of inflation.
Even though a standard working hour for all countries is expected to be employed, it is not feasible to have a uniform standard of wages due to significant differences in economic conditions. Thus, different economies need to have varying strategies to adjust their wages along with the implementation of the new working hour scheme.
For example, a country might keep the former hourly wage rate unchanged for the new work hour scheme. This will result in reducing the gross income of the workers since it is the multiple of the hourly rate. But for many workers of the world, like in some parts of Europe, who are facing job cuts, it is a much better option for them than losing their jobs as a whole. Moreover, the workers could get additional part-time jobs in the economy to compensate what they are losing during the reform. That is likely because the new work hour scheme enables economies to create more job opportunities.
Countries with a better economic strength might use different strategies to adjust their wage with the work hour reform. They might let their workers get their gross earnings unchanged by adjusting the hourly wage rate suitably.
The implementation of the proposed work-hour scheme lets economies have a widened economic playing ground. They could utilise their factors of production and resources more efficiently than before. This, in turn, results in creating a huge number of employment opportunities and having a tremendous increase in production capacity. Aggregate demand and supply are likely to increase both in the short and long run.
Leave a Reply