Михаил Попов - Working Day Reduction as the Ground of Modern Economic Development

The tendency for output volume increasing is graphically shown at the figure below.

Figure 6. Tendencies of growth of the real output volume in manufacturing industries of several countries for the period 1975-2009.

Of course, the 2008 crisis influenced the economic dynamics negatively. In Denmark, Greece, Finland, the FRG, and Slovenia output decreased, however, it does not deny the general tendency for increasing in volumes of manufacturing industries.

What lies in the basis of this tendency? It is increasing in labour productivity what the data at table 4 show.

Table 4

The Dynamics of Labour Productivity and the Real Output Volume in Manufacturing Industries for the Period 1970-2010 [33]

Thus, during 40 years in most of the countries at the table tempos of increasing in hour’s labour productivity outstripped tempos of growth of output volumes. Actually, even Austria was not exclusion because, when calculating the dynamics of productivity, the basic year was not 1970, but 1976.

Such outstripping is explained with parallel decreasing in general labour expenditures. As long as the latter went slower than increasing in productivity, then the output volume grew, though not matching increasing in labour productivity.

Four decades are a long enough period of time. To make sure of the current modification of the ratio of the dynamics of labour productivity and output let us examine the period since 1995 till 2010. The data at table 5 show it.

So, the superiority of tempos of increasing in hour’s labour productivity over the dynamics of output was seen during the examined fifteen years. Moreover, the difference between tempos of increasing in productivity, on one hand, and output tempos, on the other hand, increased during the examined period more significantly than it would take place at uniform changing of the examined indices during 40 years. We see consequences of accelerated decreasing in general expenditures of labour, caused mainly by the economic crisis that took place in the end of the examined fifteen years.

Table 5

The Dynamics of Labour Productivity and Real Output in Manufacturing Industries for the Period 1995-2010

Thus, absolute reduction in the general working time fund in manufacturing industries, as the key sector of the production sphere of modern economically developed countries, goes, on the whole, with increasing in output volumes in this sector what is a regular result of increasing in social labour productivity.

Decreasing in total expenditures of labour with increasing in output of manufacturing industries does not guarantee growth in ensuring the society with material benefits yet. The dynamics of population must be taken into account (table 6).

Table 6

The Dynamics of General Expenditures of Labour, Volumes of Output in Manufacturing Industries, and Population in Several Economically Developed Countries for the Examined Period

In most of the countries at table 6, excluding England and Canada, growth of output in manufacturing industries was higher than tempos of growth of population. It created an objective prerequisite for increasing in material well-being of an average member of the society. As for England and Canada, in this case standards of life could increase due to import of corresponding benefits secured by, for example, increasing in volumes of export of financial services.

The regular conclusion is that the modern society does not need to grow expenditures of living labour, i.e., to increase the general working time fund in the production sphere to satisfy its growing material needs. Moreover, the tendency for its reduction is becoming dominating. Accordingly, the economic ground for decreasing in the value of working time per one able-bodied member of the society forms and develops what is an objective demand of economic development of the modern society.

Factors Modifying the Dynamics of Labour Expenditures in Production of Economically Developed Countries

It should be mentioned that in economically developed countries reduction of the general working time fund is conditioned not only by increasing in social labour productivity but also by the practice of bringing several enterprises out to countries where labour force is cheaper. It is obvious that in the second case saving of labour can have a relative character: in a country where an enterprise closes, less labour is used, however, labour expenditures increase where a similar enterprise is built. Moreover, the value of working time may even increase because of a lower level of organization of production and workers’ qualification.

If industrial output produced inside an economically developed country before comes from abroad now, then, strictly speaking, time spent by workers of an exporting country must be added to working time of the developed country. A factor resisting reduction of the general working time fund in countries leading in STP takes place.

At the same time, leading countries are big exporters of manufacturing industry production to developing countries. Accordingly, the general working time fund is formed counting on not only satisfaction of inner needs of developed economics but on needs of importers of their production. In this meaning it appears to be too high.

In light of the above, there is a need for comparison of working time expenditures for production of industrial output exported by developed countries to other states and working time expenditures for production of output imported by developed countries. It is obvious that an approximate picture of this ratio can be got according to the value of the trade balance.

The fact that the balance of the USA is negative says that this country attracts additional labour expenditures of foreign producers to satisfy its material needs. In 2015 import exceeded export by approximately $500 bn. This quantity is less than 20% of the volume of industrial production of the USA. Consequently, a predominant part of consumed industrial production in the country is made by labour of American workers, so, it is exactly the dynamics of social labour productivity that decidedly influences the working time fund in production of the USA.

As for Germany, in 2014 it had positive net exports at the level of $160 bn. It made 17% of the industrial production volume of this country. Accordingly, the working time fund in Germany’s production sphere, to a certain extent, is formed counting on satisfaction of not only inner needs but other countries’ needs.

The Chinese People’s Republic is the biggest world exporter of industrial commodities, so that satisfaction of a certain part of developed countries’ needs is ensured thanks to labour of Chinese workers. Fast increasing in labour productivity of the CPR’s industry means that expenditures of labour per the fixed volume of exported commodities decrease in China. The fact that tempos of economic growth essentially exceeded tempos of increasing in employment in Chinese industry showed a relative slowdown in the general working time fund in industrial production. As the total part of the employees in agriculture and industry began decreasing in this country, then with a slowdown in tempos of growth of population prospects of an absolute decrease in the working time fund in the production sphere of China became real. No doubt, the transition to this dynamics will be a factor of reduction of the working time fund of world’s production in general.