In my previous message I explained what I mean by the "undertime tax". In this second message, I will explore the effects that removing the undertime tax could have on unemployment in Canada. In an article titled "Working Less and Enjoying it More" (Family Security in Insecure Times, Canadian Council on Social Development, 1996), Frank Reid discusses the job creation potential of voluntary work time reductions. His estimates are based on a survey of employee attitudes toward work reductions conducted by Statistics Canada in 1985. How closely those 12 year old attitudes reflect current realities is a moot point, since what Reid is highlighting is a possible direction, not a precise calculation. Leaping past all the calculations and qualifications, Reid suggests that voluntary work time reduction alone could reduce unemployment in Canada by 3-4%. This figure refers to voluntary reductions of REGULAR work times. A further reduction in unemployment could be accomplished by reducing the amount of regularly scheduled overtime, that is by reducing overtime that is not a response to production disequilibria or to emergencies. The Advisory Group on Working Time and the Distribution of Work estimated in 1994 that if one-half of the _paid_ overtime were converted to new jobs, it could mean an additional 80,000 full time jobs, (or a reduction in unemployment of about half a percent). Adding the two figures gives an estimate of a three and a half to four and a half percent reduction in unemployment. The estimate of three and a half to four and a half percent included quite a few conservative adjustments and it doesn't include any estimate of multipliers based on the increased employment. Some might argue that multipliers would be inappropriate because we are talking about the redistribution of existing work rather than new economic activity. Let's not quibble about the fine points -- using only the base estimates, we're looking at potential full-time job creation of 560,000 to 720,000 people in Canada. Finance Minister Paul Martin boasts about an employment increase of 671,000 jobs (not all of which are full time) since the end of 1993. Being an Aristotlean, I am well aware of the difference between necessary and sufficient conditions. I won't claim that removing the undertime tax (and in the process restoring the effectiveness of overtime premiums) is sufficient to realize the full potential of the 560,000 to 720,000 estimated full-time jobs that could be converted from overtime and voluntary work time reductions. But it IS a necessary condition. Those 560,000 to 720,000 jobs are dead in the water as long as the government insists on nurturing the long hours bias of public policy. It would seem that the government would need a very compelling reason to turn away from the job creation potential outlined above. On the contrary, correspondence I have from senior government officials suggests an eagerness to clutch at pretext, no matter how feeble, to avoid considering the above analysis. As an example, I have correspondence from an assistant deputy minister making the outrageous statement that the structure of employment insurance contributions could not act as an incentive to employers to use overtime "until late in the year, after the employee had exceeded the $39,000 annual maximum insurable earnings". As the instructor of an introductory course in project management, I have news for the assistant deputy minister: business people are routinely advised to ANTICIPATE costs and plan for ways to avoid them. In the case where a permanent, full-time employee earns over $18.75 an hour, ANY additional earnings will raise the employee's total annual income above the $39,000 ceiling and thus can be viewed either as being exempt from employment insurance contributions or as advancing the date after which subsequent income will be exempt. From the employer's perspective, the only difference would be uncertainty about unexpected terminations (quits, deathes, layoffs). But since the employer is concerned a calculation of the total payroll -- not each individual employee -- even such uncertainties can be accounted for with relative ease. To review my argument: There is a substantial public policy bias against reducing work time and that bias can be shown by the calculation of the undertime tax, which is often larger than its opposite, the overtime premium. Removal of the policy bias against reducing work time _could_ result in the creation of an estimated 560,000 to 720,000 full-time jobs. But at any rate, failure to remove the policy bias ensures that those jobs won't be created. Government officials seem willing to clutch the feeblest pretext to avoid even considering the job creation potential of a serious policy to enable the voluntary reduction of work time (or, the job killing record of current policy). Regards, Tom Walker ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ knoW Ware Communications | Vancouver, B.C., CANADA | "Only in mediocre art [EMAIL PROTECTED] | does life unfold as fate." (604) 669-3286 | ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ The TimeWork Web: http://mindlink.net/knowware/worksite.htm