[Marxism] The innermost secret: notes on hours and wages in 2004

["Jurriaan Bendien" <andromeda246@xxxxxxxxx>]

Karl Marx wrote specifically about class society in Capital Vol. 3 that "The
specific economic form, in which unpaid surplus-labour is pumped out of
direct producers, determines the relationship of rulers and ruled, as it
grows directly out of production itself and, in turn, reacts upon it as a
determining element... It is always the direct relationship of the owners of
the conditions of production to the direct producers - a relation always
naturally corresponding to a definite stage in the development of the
methods of labour and thereby its social productivity - which reveals the
innermost secret, the hidden basis of the entire social structure and with
it the political form of the relation of sovereignty and dependence, in
short, the corresponding specific form of the state."

So how is this all working out these days in Europe then ? Here's some ways
to look at it.

The European employers generally are concerned that European labor-hours
worked per worker are lagging behind the United States and Japan, which
affects productivity and competitiveness, especially with high a
exchange-rate for the euro. Workers have to work more for less pay, that's
the basic message from the top.

In the Netherlands...

For example - real GDP growth is basically stagnant now in the Netherlands
at less than 1%. The Dutch Employers organisation VNO-NCW, which favours
more labour market flexibility and deregulation, has claimed that, if
employees worked 4 percent longer hours without pay increase, this will
yield 13 to 20 billion euro extra "for the Dutch economy". And indeed, 230
employees of the Dutch company Smead Europe, which produces office
stationery in Groningen, have just agreed from 1 August 2004 to work a 40
hour week, instead of a 36 hour week without any pay increase, according to
the director Mr S. Feenstra van Smeadt (NRC Handelsblad, 18 July 2004, p.
1). Mr Feenstra said this measure was necessary, because of unexpected
rising costs, which threatened jobs. In a vote, 94% of the employees in his
business, half of whom are unionised, went along with the idea. However,
according to the Dutch trade union federation FNV, the move by Smead
violates a legally binding collective agreement for the graphic materials
industry.

The average hourly pre-tax wage rate here in the Netherlands is about
US$28.40 (about US$23.00 for men, $18.70 for women) and average annual
pre-tax salary is about US$30,000  (US$36,000 for men, US$21,000 for women;
the average tax rate is 28%-33%). Average labor hours per year in Holland
are 1,721 hours for fulltime workers, 952 hours for parttime workers and 771
hours for casual workers. Apart from Spain, the Netherlands has the highest
proportion of parttime workers in Europe - one third of all jobs are
parttime. So although fulltime Dutch workers work long hours, the total
average annual hours worked by Dutch workers is very low by international
standards, i.e. about 1,350 hours or so. This average compares with a total
average of about 1,800 hours a year for American workers. Dutch workers have
23-30 days leave per year.

June 2004 saw the breakdown of tripartite talks in the Netherlands over new
arrangements for early retirement and a 'life-span regulation', enabling
workers greater scope to save and manage periods of time off over their
careers. Because the government intends to get tough and continue with its
own plans, the Dutch trade unions have decided to organise industrial
action. Because the 2004-5 pay freeze agreed in autumn 2003 was dependent on
a settlement of the early retirement/leave issue, the Dutch unions have said
they will no longer be bound by the freeze, and will table wage demands
anyway.

In response, the Minister for Social Affairs and Employment has announced
that collective agreements containing wage increases will not be officially
considered as "generally binding" and thus cannot be defended in court. This
implies a direct clash between the trade unions and the state, because the
state is effectively saying "either zero wage increases, or no collective
employment contract".

Germany...

In Germany, which has the highest pre-tax wage levels in the world, and the
highest business costs apart from Japan, Der Spiegel recently reported that
workers at Siemens agreed to a 40 hour working week without pay increases,
and Daimler Chrysler is this month demanding the same from employees at a
large Mercedes-Benz factory. Because 5,000 jobs at Siemens have been under
threat, and the employers were considered shifting operations to Hungary,
IG-Metall chairman Jürgen Peters defended the more-work-without-pay contract
at Siemens as necessary, but labor-time expert Steffen Lehndorff of the
German Institute for Labor and Technology claims the new contract at Siemens
doesn't guarantee any long-term job security.  He argues that in two years
time the same problem will arise again "in which case we're looking at the
prospect of a 45-hour workweek".

Registered unemployment in Germany is now 4.2 million, of which 1.6 million
are long-term unemployed. The real number of jobless is possibly 4.7 million
and some say it's really 5 million. According to Eurostat, the German
unemployment rate is about 9.8% (the Eurozone average is 9%). So one in ten
German workers is unemployed.

The Eurostat definition of "unemployed people" are those aged 15 to 74 and
who are without work, available to start work within the next two weeks, and
have actively sought employment at some time during the previous four weeks.
The unemployment rate measures the number of people unemployed as a
percentage of the labour force;  the labour force sums the total number of
people employed and unemployed. The standardised OECD unemployment rate for
Eurozone remained at 8.8% in February 2004, 0.1 percentage point higher than
a year earlier.

Average gross hourly earnings for a German metal worker are about US$15.50
to US$16.00 and the average working week in Germany is about 38 hours. The
average yearly salary in Germany as a whole is about US$55,800, higher than
the American average of about US$43,000 (however it's US$38,000 for ordinary
male German wage workers, and US$28,100 euro for ordinary female German wage
workers).  Salaried German male staff officers earn an average of  US$60,600
and salaried German female staff officers earn US$43,000 on average.

As regards average annual hours worked, it's about 1,450 hours and German
workers have 28-30 days leave per year (In the USA and Japan, it's about
1,800 hours as mentioned; basically American workers work six 40-hour weeks
longer per year, and 70% of American fulltime workers work 50 weeks a year.
For more information, see The Overworked American: The Unexpected Decline in
Leisure, by Juliet Schor. Basic Books, 1992).

The extremely low level of confidence in both trade unions and businesses in
Germany is alarming, according the German Economic Institute. Only about
one-fifth of those surveyed in an Institute poll now say they have any
confidence in them. In East Germany, businesses fare worse than in West
Germany; while in West Germany, trade unions face a greater crisis of
confidence than in East Germany. Since last autumn, production and demand in
Germany are once again increasing somewhat, but the decline in average
utilisation of installed productive capacity (80 to 82% or so) and
employment has continued. The slight economic upturn is due mainly to
increased economic growth overseas, affecting foreign trade, rather than in
Germany itself.

Austria...

In June 2004, the new president of the Federation of Austrian Industry
employers' organisation, with partial support from the Chamber of the
Economy (WKÖ), demanded a relaxation of Austria's working time regulations,
in terms of both legislation and collective agreements, and mooted longer
working hours. This initiative has received a mixed response, with the
Minister for the Economy and Labour Affairs apparently undecided, and trade
unions strongly opposed.

The basic economic problem...

A contradiction of the capitalist economy is this: at least one-fifth more
output value could be produced with existing productive capacity in Europe,
Japan and the USA than is produced, nevertheless in reality about 1 in 10
workers is unemployed and cannot buy the output (a third of those are
long-term unemployed), and the rest have to work longer hours for less pay,
with the effect of reducing demand and maintaining excess capacity. The
official unemployment rate in Japan is about 4.3% (3.3 million workers), but
"invisible unemployment" due to survey methods used, reduced participation
and featherbedding is estimated at another 5-6%. Likewise, in the USA,
official unemployment rates for example exclude part-timers looking for
fulltime work and discouraged jobseekers who have stopped looking for work.

The last two decades have transformed the employed hierarchy: at the top are
the educated fulltimers with permanent contracts and good pay, below them
less qualified, lower-earning fulltimers with semi-permanent or annual
contracts, then a large stratum of part-time workers on even lower pay, and
at the bottom casual workers on temporary contracts and those who work in
the black or grey labor market. The younger generation of workers is much
less likely to be unionised, in part because they are more mobile between
jobs, and in part because they don't see unions as effective or important.
But this employment hierarchy exists within the framework of a welfare state
which also provide income-supports and redistributes income. Thus, many
hardworking fulltime workers with families are faced with paradoxes - they
see other workers who work less and earn less, but who have better
lifestyles, and also capitalists who seem to get money from nowhere or for
nothing. This creates confusions and conflicts about what is fair and not
fair in the world of work.

In the world economy as a whole, there is some growth in real GDP, but as
the ILO acknowledges, there is no overall growth in employment; one-third of
the world's labour force is either unemployed or underemployed, a billion
people. Yet, the demographic structure of the world population means that a
majority of the 460 million or so job-seekers streaming onto the labor
market in the next decade is unlikely find work... unless something changes
drastically.

As Marx put it, "the ultimate barrier to capital is capital itself", and
there is no class-neutral concept of "market efficiency" or "productivity".
The basic economic problem of our epoch is actually not lack of productive
capacity or capital resources, but an excess of private capital which cannot
be invested long-term at a sufficient profit in employment-creating,
productive activity. Hence, a continual increase in the proportion of
capital used for speculative activity, securities and property investments
occurs, combined with a tendency for output growth of real production to
stagnate, except in the case of some strategic resources, and the luxury
goods and armaments sectors.

Meantime, however, a major conflict is in the making in Europe over hours
and wages.  Unionisation rates, after falling in the 1990s, are again
increasing in many European countries. Even although "post-Marxists" may say
that the "labor theory of value" is 19th century nonsense, the employers
federations take it very seriously... in a Ricardian sort of way. In fact,
the economic arguments being made increasingly recall 19th century themes.
In that case, old Karl might make a comeback.

Additional notes:

1. for a statistical table on annual hours worked by different countries,
see:
www1.oecd.org/publications/distribution/corrigenda/8103091E_322_324.pdf ).
2. for a fascinating statistical study of unpaid work and time-use in Japan,
see http://www5.cao.go.jp/98/g/19981105g-unpaid-e.html
3. More throughts on unemployment data at
http://www.buzzle.com/editorials/text10-23-2002-28730.asp
4. For the international trends in trade union membership, see:
http://www.eiro.eurofound.eu.int/2004/03/update/tn0403105u.html
5. A basic introduction to unemployment statistics at:
http://www.personal.kent.edu/~cupton/bbamacro/ma03.htm

Jurriaan


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