Why are shorter hours such a problem for companies?

Question

Why are companies in general opposed to employees working shorter hours?

Shorter hours means less expenses for salaries. And while a lot of the fixed costs for office space and stay the same, this argument is less valid for companies where a lot of employees work at the client's place. At the same time it could give them a competitive advantage when hiring, which is important in fields where people are hard to find (software development) and recruiters charge a lot.

The issue has become even more important now with coronavirus and the schools having shut down. My employer wants me to use holiday-time to make up for missed hours. I would much rather take a temporary pay-cut and spend the holidays holidaying. Knowing an answer to this question could help me negotiate.

The context is Europe, specifically the Netherlands. This may be relevant, because I believe that on top of salary, employers have other costs per employee that may influence the calculation.

Answer 1

1. Benefits/overhead are not lower. The salary cost may be the same, but someone who works 40 hours a week and someone who works 32 hours a week will have the same dental expenses, same tech costs, etc.

2. It makes scheduling meetings messy. My team lets you take one flex day off every two weeks. Even with just one day off per team member, always a Monday or a Friday, numerous tasks get blocked for a day or two because of this and in practice, the person on flex needs to have access to Teams a lot of the time.

3. Differences in the kinds of people who take fewer hours. There is a strong perception that people who work fewer hours are less dedicated to the job or less focused. Availability also becomes an issue, as someone who chooses 32 hours of work probably scheduled uses for the other time. The standard 40 hours a week worker can scale to 50 hours temporarily without much hassle unless they have kids. How much this matters may differ by country depending on culture and labor regulations.

Getting a lot of good comments below, so will add more here:

4. Hiring is costly. The cost of hiring a full-time worker instead of a part-time worker would usually be the same but utilizing part-time workers means that more are required. Credit to dyesdyes.

5. Training costs are the same. It takes as much effort to train someone to do a task for 40 hours a week as it takes to train them to do it for 20 hours a week. Credit to xLeitix.

6. Some jobs can't be done part-time. Part-timers are an acceptable substitute for full-time workers when one worker can easily be replaced with another for no loss of efficiency. Otherwise, the lack of availability on the part of the part-time worker can block the progress of other employees. Credit to xLeitix.

Answer 2

Not all a business' costs are proportionate to the hours their employees work.

Let's assume employees work half their hours and get half their pay, and that they produce half the amount of sellable product (let's assume that for simplicity). Employee wages are variable costs.

However the company is still paying the full cost of building rental, insurance, interest on loans, heating, equipment etc. These are called fixed costs. So they are getting half the revenue but paying more than half the costs, so they make less than half the profit.

Low profit is bad whatever the reason.

Moreover even if a company could still miraculously make half the amount of profit by working half hours, that still means they are making half the profit, which makes them less attractive to investors compared with another company that managed to keep making its full profit.

Answer 3

Specifically in the Netherlands you have the legal right to lower your working hours (work part time) in exchange for a proportional salary cut. Your employer legally has to agree to this. However, in the case you want to work more hours, your employer is allowed to deny the request to increase your working hours.

You also have a right to temporary unpaid (partial) leave, 'Levensloop regeling', but you might have spent that allotment already.

Thirdly, since your working conditions are not safe, VCA insists you do not work until the problem is resolved. It actually does not matter that your employer can't help it either. This does in no way oblige you to take holiday.

In short, the Dutch law is behind you, and actually thinks you're pretty accommodating by taking a pay cut.

Answer 4

I think the biggest question is if the granularity of the tasks is fine enough.

If you do things like "put thing A in box B, repeat" it doesn't matter if it is done by one person 8 hours a day or by two persons 4 hours per day or one person 2 hours and the other 6 hours, and so on ...

If you have a complex task that takes you several days, it can affect delivery dates. For example someone focused working 40 hours gets a task done in a week, same task by a 20 hour worker takes two weeks or maybe even a third because he has to get into the flow after the weekend.

If you split the complex task on two persons working 20 hours each, there will be a lot of overhead for them to synchronize their work, so they will also end up in the second week, effectively costing more.

There are of course also benefits:

If the 20 hour work has a weekend in between, he might have time to think about the task and gets it done more efficient.

If one of the two workers gets sick, you still have a redundancy with knowledge about the project.

So it really depends on the tasks and the business model of the company. And how urgent the client maybe needs a product, imagine 6 months vs 12 months vs maybe 9 months for the examples above.

Generally I think people who work less hours are more relaxed and healthy and don't make so many mistakes as someone who is working nonstop the whole week, so you have less problems with sick days, burnout, turnover.

Answer 5

Time is money.

A business takes your productivity and turns it into profit.

Less productivity, less profit.

Expressed differently, if working less has no impact on profit, why not simply reduce your hours and wages to zero. A lot less to worry about and the profit remains the same.

There is an argument that longer hours does not mean more productivity, but this is probably the wrong time to make such an argument.

I haven't even touched on how businesses often have contracts to fill, and plans to keep.

Answer 6

For now, I'd approach the employer and ask - I can imagine they may be very happy to temporarily lower your hours.
The situation may be legally asymmetric: employees may ask (or even have a right to reduce hours) but the employer may not be allowed to suggest a proportional reduction in work-time and wages to you. While I don't know whether that is the case in the Netherlands, this is the case e.g. in Germany, and labor legislation tends to be comparable due to EU.

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In general, there are various factors that may play a role for whether part-time is easy/good (leading either to higher absolute profit or to more profit per expense and/or capital needed) to implement for a particular employee or not.

• (+) There's literature on overall higher efficiency of part-time workers.

• (+/-) This may allow a business to fill positions with specialists where less than a full employee is required. (More relevant for small businesses)
  But only iff a good match between skill set AND work time needs/wishes is found.

• If two people share one full-time job there is a trade-off:

  • (+) Two heads are better than one
  • (-) There are communication losses that do not occur between one and the same person.

• (-) A company invests a certain amount of training into each employee until the employee is able to work efficiently.

• (-) A part-time employee may be slower in gaining professional experience.

• (-) For certain employees it may be very difficult to find & hire a "part-time partner".

• (-) In practice, part-time often correlates with low flexibility/particular temporal wishes: many people want to work mornings only (when kids are in kindergarden/school), very few want to work afternoon only.
  This can be very costly for the company since they need to provide more work space, equipment etc. to get the same amount of work done.
  So it's not only that fixed costs stay the same, they may even increase. And that still holds if the work is done at a client's.

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The following is specific for germany, but it may give you some starting points to search whether similar rules exist in the Netherlands.

• German employees have the right to work part-time on request (subject to some conditions and there exceptions for small companies, there are also some valid reasons why an employer can refuse)
  One important condition is a notification period of 3 months, and the employer then has 2 months to refuse if they have grounds to do so.
  E.g. they are not able to find someone to fill the part-time gap, and thus the employee working part-time would cause disproportionate disruption of the business processes -> refusal.

• They also have a right to temporarily switch to part time/lower work hours (subject to somewhat stronger conditions than the general move to part-time).

• The reverse is not true: an emplyer usually cannot one-sidedly demand that an employee should work fewer hours for proportionally less wage.

• But under specific circumstance (such as the Covid pandemic right now), short-time working(Kurzarbeit) is possible. German Kurzarbeitergeld (partial compensation for lost wage due to short-time working works in a way that the company can get this money back from unemployment insurance. But one of the conditions is that first, (old) holidays and overtime must have been used up.
  Werktijdverkorting looks as if the Netherlands follow a different strategy right now, though.

Right now, the local economic programs to deal with the Covid situation may give the question totally different answers than under more usual circumstances. The only solution to that is again: talk to your employer.

Answer 7

My employer wants me to use holiday-time to make up for missed hours. I would much rather take a temporary pay-cut and spend the holidays holidaying. Knowing an answer to this question could help me negotiate.

At least in Germany, employers can't make their employees to take their holidays just because they can't provide safe working conditions in this situation. Also when public life (and by consequence schools) is shut down and children need to be taken care of by the employee temporarily, this doesn't necessarily mean that holidays or pay-cuts are in order.

For reference (German sources):

• https://www.informationsportal.de/quarantaene-wegen-corona-wer-bezahlt-den-arbeitsausfall/
• https://www.gesetze-im-internet.de/bgb/__616.html (linked there)
• https://www.butenunbinnen.de/nachrichten/gesellschaft/corona-virus-arbeitnehmer-bremen-100.html

The context is Europe, specifically the Netherlands.

Look up your local laws. Research specifically about the current situation. The current situation is not the general case.

Answer 8

Perhaps I have missed this in another answer, but one significant difference between a pay cut and holiday is:
Taking extra free time with a pay cut means you are absent longer than your normal holiday time.

While a company without much work may be happy to give employees extra unpaid time off these days, a company with enough work prefers to NOT miss you longer.

Answer 9

The top answers are already good, but I wanted to reply to part of your question:

Shorter hours means less expenses for salaries. And while a lot of the fixed costs for office space and stay the same, this argument is less valid for companies where a lot of employees work at the client's place.

For the sake of example, let's take this to an extreme. While the wage cost may be exactly the same, do you think 40 people working 1 hour a week can perform as well as 1 person who works 40 hours a week?
They won't. Because they will spend more time communicating with the 39 others than they will spend working.

Firstly, you already need to overlap their working times to person 1 can tell person 2 what happened, and then person 2 can tell person 3, and so on. That means you won't be able to staff your 40 employees for the duration of a full 40 hour work week.
Secondly, that overlap is time lost doubly. Both people will be busy talking to each other and will therefore not be working (not in the sense that a single employee would be working in silence). Any time a person loses on figuring out what the previous guy did, even if they do so by themselves, is still time lost. Any miscommunication, and time spent reading documentation that the previous guy also read, ... it always costs time.

Communication is an overhead cost. This is exactly why managers exist in the first place. Communication and team management is such a cost that for a sizeable group of people, it's literally cheaper to hire an additional person (the manager), because they will save the company more money (by streamlining the communication process) than they cost (the manager's wage).

In a more realistic scenario, where you'd e.g. change from a 40 hour work week to a 30 hour one; that still means you need to hire 1/3 more people (e.g. from 30 people to 40). All their communication will be a drain on work efficiency and therefore you will have lowered productivity.

And that's even assuming these people see eye to eye and don't do duplicate work or have to correct each other's work.

Answer 10

When you are working at a client site, then it is very likely that your employer gets paid by the client by the hour.

If you work less hours, then the client will pay less, and your employer receives less revenue.

Even worse, the client might insist that they have a contract for 40 hours a week. So if you work any less, then your employer is obligated to find someone else to work the remaining hours. Which is impractical for everyone involved.