FOR Comment: Reduce the Rigidity of the Regulation of Working Time
- Many labour regulations were created for large industrial plants from the mid-20th century - this is also the spirit of the Polish Labour Code of 1974. However, with the automation of industry and the increase in employment in services, economic realities changed. The increasingly popular flexible working time makes it easier to balance private life with work in a way better suited to individual preferences and lifestyles, often to the benefit of productivity. The possibility for an employee to plan their working hours according to their own rhythm of the day, to plan ad hoc visits to a doctor, to studies, to a bank or family commitments during typical working hours, to postpone working time to avoid time-consuming rush hour commuting, as well as the possibility to work from home are often very attractive for employees today and are beneficial for employers. Unfortunately, rigid working time regulations make it difficult for employees and employers to work out mutually beneficial solutions in this area - this is one of the main conclusions of a published by FOR Lithuanian Free Market Institute report (LFMI)1.
- The report compares the rigidity of working time regulation based on measurements prepared by the World Bank, complementing it with surveys on labour law from Bulgaria, the Czech Republic, Estonia, Lithuania, Poland, Slovakia, Denmark and Switzerland. Working time regulations, including the duration of the working day, additional remuneration for non-standard working hours and holidays, are more rigid in Poland than the average of 40 other EU and OECD member states. Poland stands out especially in terms of minimum bonuses for working on a day off during the week (the highest applies to Poland and 9 other countries) and the minimum length of leaves of experienced employees (4. the highest, along with Italy). Rigid regulation of working time contributes to pushing employees into civil law contracts and self-employment, where the Labour Code does not apply, and employees negotiate holidays or bonuses themselves. If the minimum bonus for atypical working hours were lowered to the average of the other EU member states, the minimum bonus for working on weekdays off would fall from 100% of salary to 37%, for overtime from 50% to 33% and for night work from 20% to 16%. However, these are only the easiest aspects to compare in an international context, and not necessarily the most relevant issues from a labour market perspective.
- Unfortunately, the Polish Labour Code contains a lot of "rigidity", which is not detected by the quantitative measures used for international comparisons. These include the so-called hourly rigidity, i.e. restrictions on how working hours can be planned, recorded, calculated and settled2. For example, the Labour Code makes it difficult or even impossible to plan your working time at short notice. An employee can make an arrangement with the employer for specific hours, but changing them from day to day is often, according to law, impossible. This makes it difficult to effectively reconcile work with leisure time and other duties, and turns out to be the most difficult for the most sensitive categories of employees, such as retired people who often go to doctor, parents of small children or full-time students. Such people are most willing to work part-time, but the lack of flexibility in planning their hours limits their employability. For this reason, among others, Poland is one of the EU economies where part-time work is the least frequently used, which additionally hinders the work of the most sensitive employees and attracting them to the labour market. In order to shape working time effectively, employees and employers often agree on the basis of a "gentleman's agreement” or use civil law contracts and self-employment, but what is the purpose of such protection by the Code then? If it leads to work relationships being based on informal arrangements, which are later difficult to enforce in the event of a real dispute, it may weaken rather than enhance the certainty of the relationship between the two parties. The law should minimize transaction costs between the parties, while the rigidity often makes a contribution to creating new ones.
1 LFMI (2019) report prepared by the Lithuanian think-tank, Lithuanian Free Market Institute in cooperation with the Civil Development Forum and partner think-tanks from Bulgaria, Czech Republic, Estonia and Slovakia. This is part of a 3-year research on flexibility in labor regulation, initiated and coordinated by the LFMI.
Rafał Trzeciakowski, FOR economist
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