---------- Forwarded message ---------- Date: Mon, 25 May 1998 16:07:19 +0100 (BST) From: David Chapman <[EMAIL PROTECTED]> Reply-To: [EMAIL PROTECTED] Subject: Re: uk-policy Working Time In our discussion of excessive working time, one explanation for it which was put forward was that employers currently have the incentive to employ fewer workers each working longer hours. Is it possible then to reverse this incentive, to induce employers to employ more workers each working fewer hours? I previously put forward a proposal for this to the uk-policy group in the paper "Tax and benefit reform to reduce unemployment", which is available on the web at: http://www.democdesignforum.demon.co.uk/unemp.nexus.html The proposal is simply to convert the income tax and social security tax currently paid by employees, into a "Work-Spreading Tax" paid by the employer. Since taxation is progressive, the employer will pay no tax or reduced tax on the first portion of a person's wage. In effect this will be a wage subsidy, worth about 35 pounds per week per worker. Employers will thus have an incentive to spread the available work, so as to receive more of these subsidies, employing more workers each working fewer hours, to do a given amount of work. For example, suppose that a firm, instead of employing 33 workers each working 38 hours per week, employs 38 workers each working 33 hours per week. The firm will thus reduce the tax it has to pay, and hence its labour cost, by 5 x 35 = 175 pounds per week. Thus if workers leave or retire, or if production needs to be expanded, the firm will seek to give jobs to unemployed workers, rather than to give its existing work force more hours of work per week. It will probably prefer to take them on as part-timers, since this will enable it to employ more new workers, and save more tax. If a pay rise is being negotiated, the firm will probably seek to include some reduction of hours per week as part of the bargain, that is, it will seek to persuade workers to take part or all of their rise as an increase in leisure, rather than as an increase in total pay. This will allow it to save tax, by taking on more workers from the unemployed. WST is likely to increase security of employment, for those workers who are already employed. Firms which at present respond to the opportunities of new technology by dismissing part of their workforce, will be more likely under WST to retain their workers, but reduce the hours of work offered to them. This incentive to the employers is not a new subsidy, which would be vastly expensive, but instead it is an essentially costless adjustment to the present method of collecting tax on employees' income. Progressive taxation is already being used, which levies no tax or low tax on the first portion of an employee's income. WST simply makes use of this existing feature of present taxation, to provide an incentive for the employer to spread work. ******************************************** Dr David Chapman Email: [EMAIL PROTECTED] Democracy Design Forum Coles House, Buxhall, Stowmarket, Suffolk IP14 3EB, UK Tel: +44 (0) 1449 736 223 Fax: +44 (0) 1449 612 274 Website: http://www.democdesignforum.demon.co.uk/index.html ------------------------------------------------------------- Posted to uk-policy, a service of Nexus. http://www.netnexus.org/ Hosting and email provided by new media consultants On-Line Publishing Regards, Tom Walker ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ #408 1035 Pacific St. Vancouver, B.C. V6E 4G7 [EMAIL PROTECTED] (604) 669-3286 ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ The TimeWork Web: http://www.vcn.bc.ca/timework/
