Authors: Meena Miriam Yust and Arshad M. Khan
In the earliest days, foraging was key. Fruits, berries, edible plants and roots comprised a varied diet, the roots often mashed and made into meal.
Then there were days when the men — usually layabouts for foraging — would get the urge in their bellies for meat. That was when all the chatting and bonding paid off. Working together they could down a large beast and share the meat with the whole group … feasting for several days.
No nine-to-five slavery in those times, no five-day work week. That is all of recent vintage. And it leads to an unmistakable Monday morning feeling …
Millions of alarm bells sound in the wee hours of the morning, as semi-comatose individuals slide their snooze buttons hoping for a moment’s rest before the inevitable rush to the office. The weekend is over. Fun over, work beckons. Marching along like ants going to their own funeral, masses of people will soon swarm into the subway, vying for a seat in a stench-free area, surrounded shoulder to shoulder with others like them.
And for what when we know first hand that wage buying power hasn’t changed in decades while US income inequality continues to grow. Good luck to the rich who keep getting richer as the stock market booms while trends in wealth show the lower 60 percent have seen a net worth decline. Can we ever get a real wage increase? Yes, by working fewer hours for the same weekly salary when the over overtime on a few hours more would boost our financial health. More money and free time makes for a happier work and life balance. Just as raising the minimum wage, it would have an impact on pay inequality as economist Ben Zipperer made clear in his testimony before Congress last year.
For most of us, next come the Tuesday blues, that lethargic, listless feeling of no escape. Wednesdays mark the halfway point, Thursdays bring the hope of almost-Friday, and then Friday arrives with the joy of the weekend break. But soon it will be Monday morning again. The majority of our lives are spent working. The weekend leaves barely enough time for recovery, laundry, and if we’re lucky a smidgen of fun, before returning to the tedium of the five-day work week. It’s not that the powers that be are unaware of our circumstances. As long ago as 1935, the Senate Judiciary Committee held thirty-hour work week hearings but the idea failed to get traction. .
But is this weekly misery necessary? And where did it come from?
One year marks an orbit of the Earth around the sun. Months too are derived from astronomy. Five thousand years ago, the ancient Sumerian calendar had 12 months marked by the sighting of a new moon. They did not have weeks. And archaeologists have discovered a hunter gatherer calendar from Aberdeen, Scotland dating farther back from 8,000 B.C., which also appeared to mimic phases of the moon to track months.
The history of the seven-day week leads us to Babylon 4,000 years ago. With a lunar month they used seven days to represent each of the four phases of the moon, adding an intercalary day(s) to synchronize it to the actual lunar cycle. All of which worked out very well because they believed there were seven planets in the solar system and deemed the number significant. The seven-day week eventually spread to Egypt, Greece, and thence to India, China and Rome, ending up in the Gregorian calendar we use today.
The five-day work week was first introduced in a New England mill in 1908. Before this, Saturdays were a half day and Sundays a holiday.
It was not expected that humans would still be doing this a century later. John Maynard Keynes in 1930 predicted that the work week would be reduced to 15 hours, within a couple of generations, due to advancements in technology. In 2017, economist and historian Rutger Bregman put forward its feasibility by 2030 in his best seller, Utopia for Realists. A Senate subcommittee in 1965 also predicted we would be working 14-hour weeks by the year 2,000.
More recently, companies have started to study whether there are benefits to a four-day work week. Microsoft Japan recently reported the results of a four-day work week study. The company had employees work four days while receiving five-day pay. The results were striking – a whopping 40% increase in productivity. The firm also reported increased efficiency in several areas, including lower electricity and paper usage.
A New Zealand company Perpetual Guardian in 2018 experimented with a four-day work week with five-day pay. It resulted in a 20 percent increase in productivity while employees experienced a 45 percent improvement in work-life balance. The company has now made the policy permanent.
Another example is a company called Basecamp. Employees work 8 hours a day for four days. Jason Fried, the CEO, states in a New York Times op-ed that “Better work gets done in four days than in five.”
Despite the jokes about civil servants they do work, and some very hard. In a study of British civil servants, it was determined that those who worked 55 hours per week showed a comparatively greater cognitive decline some three years later than those working for 40 hours. Imagine what happens to us when we extend this to a lifetime of 40-plus-hour weeks.
The question is, do we need to work even 40 hours per week? If Keynes predicted humans would only need to work 15 hours by this point in time, and there has been an explosion of technological advancements in the last 30 years unimaginable to him — from computers to robotics to the internet and advancements in every type of engineering and medical field — then why are we still 40-hour slaves, particularly when the Basecamp example has demonstrated that 32 hours per week is equally or perhaps more productive?
Next is the question of whether even 32 hours, as at Basecamp, are necessary. David Graeber is an anthropologist at the London School of Economics. His 2018 book Bullshit Jobs: A Theory describes jobs that appear to have no useful purpose. These are far more common that one might expect. In a poll of British citizens, 37% considered their jobs meaningless. In the Netherlands, 40% of respondents believed their job had no reason to exist. Graeber defines bullshit jobs as “a form of paid employment that is so completely pointless, unnecessary, or pernicious that even the employee cannot justify its existence even though, as part of the conditions of employment, the employee feels obliged to pretend that this is not the case.”
In many of these jobs, employees sit at a desk five days a week with nothing to do. In other jobs, higher management invents tasks for subordinates to complete solely to fill their time. Some jobs exist merely for appearances. He splits them into categories, encompassing jobs with which we are all too familiar. “Flunkies” serve the purpose of making others feel superior (these include doormen, assistants, etc.). “Goons” encompass those such as the public relations professional whose job is to show the public that Oxford is a top school! “Duct tapers” are people in an organization who have to deal with its incompetence. For example, the person who handles lost luggage at an airport or addresses complaints on the phone. “Box tickers” are designed to look busy and push paper work forward. “Taskmasters” are split into two types – those that assign more bullshit work to subordinates “bullshit generators”, and those who supervise people who do not need supervision.
For the 60% of people who do not have “bullshit jobs” – studies have shown that fewer work days increases productivity and efficiency, not to mention mental well being. Companies will be more efficient, workers will work better and will be rested and refreshed, and employees will be more likely to stay in their jobs. It’s a plus-sum game if the work week is cut to 30 hours/ 4 days forthwith. Anything beyond 30 hours would be overtime, at time-and-a-half rates. The proposal is still twice John Maynard Keynes’ 15-hour expectation.
There is another very good reason for this proposal: Real wages in the US have been stagnant since the 1960s while the GDP is up over four fold and the stock market Dow is up about ten times, also in real terms i.e. after allowing for inflation. It means stock and asset holders have been getting much, much richer while the working sucker is getting nowhere. Cutting the work week down is a fair way to get part way (a very small part) even. It is 25 percent less work and a one-third real increase in wages making a minor dent in the horrendous inequality in the US, which happens to be way ahead in this dubious honor among all developed countries.
It is a long time since the hunter gatherers of Scotland or the Babylonians. Their week remains ingrained, and the weekend created thousands of years later expanded from the Biblical single day of rest to one-and-a-half days in England, and then finally to two in New England at the beginning of the 20th century. A hundred years later, is it not high time we advanced to three days? Or perhaps to diminish the chances of worse Monday morning blues, it might be better to work two days, have a day off, then two more days of work before the regular weekend. Humans were not designed for undue stress, we were designed for leisure, to be gathering food as we need it, and occasionally hunting, as the Scots mentioned earlier, and others of our ancestors did happily for generations.
Authors’ Note: This article first appeared on Truthout.org in a shorter edited version.
The Monetary Policy of Pakistan: SBP Maintains the Policy Rate
The State Bank of Pakistan (SBP) announced its bi-monthly monetary policy yesterday, 27th July 2021. Pakistan’s Central bank retained the benchmark interest rate at 7% after reviewing the national economy in midst of a fourth wave of the coronavirus surging throughout the country. The policy rate is a huge factor that relents the growth and inflationary pressures in an economy. The rate was majorly retained due to the growing consumer and business confidence as the global economy rebounds from the coronavirus. The State Bank had slashed the interest rate by 625 basis points to 7% back in the March-June 2020 in the wake of the covid pandemic wreaking havoc on the struggling industries of Pakistan. In a poll conducted earlier, about 89% of the participants expected this outcome of the session. It was a leap of confidence from the last poll conducted in May when 73% of the participants expected the State Bank to hold the discount rate at this level.
The State Bank Governor, Dr. Raza Baqir, emphasized that the Monetary Policy Committee (MPC) has resorted to holding the 7% discount rate to allow the economy to recover properly. He added that the central bank would not hike the interest rate until the demand shows noticeable growth and becomes sustainable. He echoed the sage economists by reminding them that the State Bank wants to relay a breather to Pakistan’s economy before pushing the brakes. The MPC further asserted that the Real Discount Rate (adjusted for inflation) currently stands at -3% which has significantly cushioned the economy and encouraged smaller industries to grow despite the throes of the pandemic.
Dr. Raza Baqir further went on to discuss the current account deficit staged last month. He added that the 11-month streak of the current account surplus was cut short largely due to the loan payments made in June. The MPC further explained that multiple factors including an impending expiration of the federal budget, concurrent payments due to lenders, and import of vaccines, weighed heavily down on the national exchequer. He further iterated that the State Bank expects a rise in exports along with a sustained recovery in the remittance flow till the end of 2021 to once again upend the current account into surplus. Dr. Raza Baqir assured that the current level of the current account deficit (standing at 3% of the GDP) is stable. The MPC reminded that majority of the developing countries stand with a current account deficit due to growth prospects and import dependency. The claims were backed as Dr. Raza Baqir voiced his optimism regarding the GDP growth extending from 3.9% to 5% by the end of FY21-22.
Regarding currency depreciation, Dr. Baqir added that the downfall is largely associated with the strengthening greenback in the global market coupled with high volatility in the oil market which disgruntled almost every oil-importing country, including Pakistan. He further remarked, however, that as the global economy is vying stability, the situation would brighten up in the forthcoming months. Mr. Baqir emphasized that the current account deficit stands at the lowest level in the last decade while the remittances have grown by 25% relative to yesteryear. Combined with proceeds from the recently floated Eurobonds and financial assistance from international lenders including the IMF and the World Bank, both the currency and the deficit would eventually recover as the global market corrects in the following months.
Lastly, the Governor State Bank addressed the rampant inflation in the economy. He stated that despite a hyperinflation scenario that clocked 8.9% inflation last month, the discount rates are deliberately kept below. Mr. Baqir added that the inflation rate was largely within the limits of 7-9% inflation gauged by the State Bank earlier this year. However, he further added that the State Bank is making efforts to curb the unrelenting inflation. He remarked that as the peak summer demand is closing with July, the one-way pressure on the rupee would subsequently plummet and would allow relief in prices.
The MPC has retained the discount rate at 7% for the fifth consecutive time. The policy shows that despite a rebound in growth and prosperity, the threat of the delta variant still looms. Karachi, Pakistan’s busiest metropolis and commercial hub, has recently witnessed a considerable surge in infections. The positivity ratio clocked 26% in Karachi as the national figure inched towards 7% positivity. The worrisome situation warrants the decision of the State Bank of Pakistan. Dr. Raza Baqir concluded the session by assuring that despite raging inflation, the State Bank would not resort to a rate hike until the economy fully returns to the pre-pandemic levels of employment and production. He further assuaged the concerns by signifying the future hike in the policy rate would be gradual in nature, contrast to the 2019 hike that shuffled the markets beyond expectation.
Reforms Key to Romania’s Resilient Recovery
Over the past decade, Romania has achieved a remarkable track record of high economic growth, sustained poverty reduction, and rising household incomes. An EU member since 2007, the country’s economic growth was one of the highest in the EU during the period 2010-2020.
Like the rest of the world, however, Romania has been profoundly impacted by the COVID-19 pandemic. In 2020, the economy contracted by 3.9 percent and the unemployment rate reached 5.5 percent in July before dropping slightly to 5.3 percent in December. Trade and services decreased by 4.7 percent, while sectors such as tourism and hospitality were severely affected. Hard won gains in poverty reduction were temporarily reversed and social and economic inequality increased.
The Romanian government acted swiftly in response to the crisis, providing a fiscal stimulus of 4.4 percent of GDP in 2020 to help keep the economy moving. Economic activity was also supported by a resilient private sector. Today, Romania’s economy is showing good signs of recovery and is projected to grow at around 7 percent in 2021, making it one of the few EU economies expected to reach pre-pandemic growth levels this year. This is very promising.
Yet the road ahead remains highly uncertain, and Romania faces several important challenges.
The pandemic has exposed the vulnerability of Romania’s institutions to adverse shocks, exacerbated existing fiscal pressures, and widened gaps in healthcare, education, employment, and social protection.
Poverty increased significantly among the population in 2020, especially among vulnerable communities such as the Roma, and remains elevated in 2021 due to the triple-hit of the ongoing pandemic, poor agricultural yields, and declining remittance incomes.
Frontline workers, low-skilled and temporary workers, the self-employed, women, youth, and small businesses have all been disproportionately impacted by the crisis, including through lost salaries, jobs, and opportunities.
The pandemic has also highlighted deep-rooted inequalities. Jobs in the informal sector and critical income via remittances from abroad have been severely limited for communities that depend on them most, especially the Roma, the country’s most vulnerable group.
How can Romania address these challenges and ensure a green, resilient, and inclusive recovery for all?
Reforms in several key areas can pave the way forward.
First, tax policy and administration require further progress. If Romania is to spend more on pensions, education, or health, it must boost revenue collection. Currently, Romania collects less than 27 percent of GDP in budget revenue, which is the second lowest share in the EU. Measures to increase revenues and efficiency could include improving tax revenue collection, including through digitalization of tax administration and removal of tax exemptions, for example.
Second, public expenditure priorities require adjustment. With the third lowest public spending per GDP among EU countries, Romania already has limited space to cut expenditures, but could focus on making them more efficient, while addressing pressures stemming from its large public sector wage bill. Public employment and wages, for instance, would benefit from a review of wage structures and linking pay with performance.
Third, ensuring sustainability of the country’s pension fund is a high priority. The deficit of the pension fund is currently around 2 percent of GDP, which is subsidized from the state budget. The fund would therefore benefit from closer examination of the pension indexation formula, the number of years of contribution, and the role of special pensions.
Fourth is reform and restructuring of State-Owned Enterprises, which play a significant role in Romania’s economy. SOEs account for about 4.5 percent of employment and are dominant in vital sectors such as transport and energy. Immediate steps could include improving corporate governance of SOEs and careful analysis of the selection and reward of SOE executives and non-executive bodies, which must be done objectively to ensure that management acts in the best interest of companies.
Finally, enhancing social protection must be central to the government’s efforts to boost effectiveness of the public sector and deliver better services for citizens. Better targeted social assistance will be more effective in reaching and supporting vulnerable households and individuals. Strategic investments in infrastructure, people’s skills development, and public services can also help close the large gaps that exist across regions.
None of this will be possible without sustained commitment and dedicated resources. Fortunately, Romania will be able to access significant EU funds through its National Recovery and Resilience Plan, which will enable greater investment in large and important sectors such as transportation, infrastructure to support greater deployment of renewable energy, education, and healthcare.
Achieving a resilient post-pandemic recovery will also mean advancing in critical areas like green transition and digital transformation – major new opportunities to generate substantial returns on investment for Romania’s economy.
I recently returned from my first official trip to Romania where I met with country and government leaders, civil society representatives, academia, and members of the local community. We discussed a wide range of topics including reforms, fiscal consolidation, social inclusion, renewably energy, and disaster risk management. I was highly impressed by their determination to see Romania emerge even stronger from the pandemic. I believe it is possible. To this end, I reiterated the World Bank’s continued support to all Romanians for a safe, bright, and prosperous future.
First appeared in Romanian language in Digi24.ro, via World Bank
US Economic Turmoil: The Paradox of Recovery and Inflation
The US economy has been a rollercoaster since the pandemic cinched the world last year. As lockdowns turned into routine and the buzz of a bustling life came to a sudden halt, a problem manifested itself to the US regime. The problem of sustaining economic activity while simultaneously fighting the virus. It was the intent of ‘The American Rescue Plan’ to provide aid to the US citizens, expand healthcare, and help buoy the population as the recession was all but imminent. Now as the global economy starts to rebound in apparent post-pandemic reality, the US regime faces a dilemma. Either tighten the screws on the overheating economy and risk putting an early break on recovery or let the economy expand and face a prospect of unrelenting inflation for years to follow.
The Consumer Price Index, the core measure of inflation, has been off the radar over the past few months. The CPI remained largely over the 4% mark in the second quarter, clocking a colossal figure of 5.4% last month. While the inflation is deemed transitionary, heated by supply bottlenecks coinciding with swelling demand, the pandemic-related causes only explain a partial reality of the blooming clout of prices. Bloomberg data shows that transitory factors pushing the prices haywire account for hotel fares, airline costs, and rentals. Industries facing an offshoot surge in prices include the automobile industry and the Real estate market. However, the main factors driving the prices are shortages of core raw materials like computer chips and timber (essential to the efficient supply functions of the respective industries). Despite accounting for the temporal effect of certain factors, however, the inflation seems hardly controlled; perverse to the position opined by Fed Chair Jerome Powell.
The Fed already insinuated earlier that the economy recovered sooner than originally expected, making it worthwhile to ponder over pulling the plug on the doveish leverage that allowed the economy to persevere through the pandemic. The main cause was the rampant inflation – way off the 2% targetted inflation level. However, the alluded remarks were deftly handled to avoid a panic in an already fragile road to recovery. The economic figures shed some light on the true nature of the US economy which baffled the Fed. The consumer expectations, as per Bloomberg’s data, show that prices are to inflate further by 4.8% over the course of the following 12 months. Moreover, the data shows that the investor sentiment gauged from the bond market rally is also up to 2.5% expected inflation over the corresponding period. Furthermore, a survey from the National Federation of Independent Business (NFIB) suggested that net 47 companies have raised their average prices since May by seven percentage points; the largest surge in four decades. It is all too much to overwhelm any reader that the data shows the economy is reeling with inflation – and the Fed is not clear whether it is transitionary or would outlast the pandemic itself.
Economists, however, have shown faith in the tools and nerves of the Federal Reserve. Even the IMF commended the Fed’s response and tactical strategies implemented to trestle the battered economy. However, much averse to the celebration of a win over the pandemic, the fight is still not through the trough. As the Delta variant continues to amass cases in the United States, the championed vaccinations are being questioned. While it is explicable that the surge is almost distinctly in the unvaccinated or low-vaccinated states, the threat is all that is enough to drive fear and speculation throughout the country. The effects are showing as, despite a lucrative economic rebound, over 9 million positions lay vacant for employment. The prices are billowing yet the growth is stagnating as supply is still lukewarm and people are still wary of returning to work. The job market casts a recession-like scenario while the demand is strong which in turn is driving the wages into the competitive territory. This wage-price spiral would fuel inflation, presumably for years as embedded expectations of employees would be hard to nudge lower. Remember prices and wages are always sticky downwards!
Now the paradox stands. As Congress is allegedly embarking on signing a $4 trillion economic plan, presented by president Joe Bidden, the matters are to turn all the more complex and difficult to follow. While the infrastructure bill would not be a hard press on short-term inflation, the iteration of tax credits and social spending programs would most likely fuel the inflation further. It is true that if the virus resurges, there won’t be any other option to keep the economy afloat. However, a bustling inflationary environment would eventually push the Fed to put the brakes on by either raising the interest rates or by gradually ceasing its Asset Purchase Program. Both the tools, however, would risk a premature contraction which could pull the United States into an economic spiral quite similar to that of the deflating Japanese economy. It is, therefore, a tough stance to take whether a whiff of stagflation today is merely provisional or are these some insidious early signs to be heeded in a deliberate fashion and rectified immediately.
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