How the 44 hour Week Will Affect Costs
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Higher Wages Brought About by the Reduction of the Working Week from 48 Hours to 44 Hours Will Increase Operating Costs by an Average of 5 per cent.
THE new edition of " The Commercial Motor" Tables of Operating Costs was completed and printed almost simultaneously with the reduction of the working hours of drivers from 48 to 44 per guaranteed week. Fortunately, the figures in the Tables can easily be adjusted to bring them into line with this modification.
The necessary information has already been given in a news paragraph in the issue of "The Commercial Motor" dated January 31, and I now enlarge upon the subject of these increases. Taking the figures at their face value, the essential corrections are few and simple. I take it for granted, first of all, that the user of the Tables will appreciate that in every table he must read 44 hours wherever 48 hours appears. In those in which costs are given for 96 hours as well as 48, then for 96 hours he must read 88 hours. Apart from that, the procedure is to add Id. in the shilling to the standing charges per hour and per 81-hour day. In the time and mileage figures the procedure is to add Id. in the shilling per hour to the rate per hour. That is equivalent to adding 1/12 to those amounts.
Amending Cost Figures
Taking the example quoted in the news paragraph, referring to Table II and cbnsidering the figures relating to the operation of a 6-ton petrol-engined vehicle, we see that the standing charge per hour is given as 3s. 3d. If this sum be increased by Id. in the shilling, 31d. is added and the new figure is 3s. 61d. Similarly, the 27s. 7d. quoted as the standing charge per 8-1-hour day must be increased by 2s. 44., bringing it up to 29s. lid.
The same thing must be done in that portion of the table which gives time and mileage charges; taking the figure of 5s. 9d. per hour we add 51(1., say 6d., making it 6s. 3d. per hour.
Carping critics may raise a point here. The ratio of 48 hours to 44 hours is 12 is to 11, so that actually the addition should be not 1112, which is Id. in the shilling, but 1/11, which is rather more.
My answer to that is that 1/1Id. is 0.090909d., and 1/12d. is 0.083333d. The difference between the two is 0.007576d., so that in taking the simple course of adding 1d. in the shilling I am inaccurate only to the extent of about threequarters of 1 per cent., or £7 Its. 3d. per £1,000. Anyone who can assess his actual cost with such a degree of accuracy is a very good man indeed.
The percentage increase in wages, calculated mathematically, is 9.0909. The actual percentage increase depends upon how closely the wages paid, calculated in shillings and pence, approximate to the mathematically calculated figure. For example, take a Grade I wage in relation to a vehicle weighing more than 12 tons gross, which hitherto has been £5 3s. per week of 48 hours, or 2s. I id. per hour. Calculated mathematically, the same wage spread over a 44-hour week is equal to 2s. 4.090909d. per hour. If I take that as being 2s. 4d., the increase is 8.8 per cent.
9.2 per cent. Increase
If the man be paid to the nearest farthing above the actual amount, he will receive 2s. 41d. per hour, which is an increase of nearly 9.8 per cent.; if to the nearest Ad., he will be paid 2s. 4-Ad., which is approximately a 9 per cent. increase. If, as I expect will be the case, be be paid to the nearest A above the 2s. 4.090909d., he will receive 2s. 41d., the percentage value of which is 9.2. Obviously, the Maximum difference between the wages now being paid and those which will have to be paid under the new award will, in nearly every case, be in excess of the theoretical figure of 9 per cent., for the simple reason that hardly any operator will be able to reduce the hours for which he requires to operate his vehicle to fewer than the usual 48. He will therefore have to pay overtime every week, Moreover, the overtime rates, being based on 2s. 4.0909d. per hour, will be much more than they were when based on 2s, lid, per hour. The actual amounts, calculating to the exact figure and taking the nearest A. above, are as follows:-Ordinary time, 2s. 41d.; time-and-a-quarter, 2s. Hid.; time-and-a-half, 3s. 6-Ad.; double time, 4s. 8Ad.
The operator of a vehicle of the type under consideration is now paying £5 3s. per week in wages for a 48-hour week's work. Now he will pay £5 3s. for 44 hours, plus four hours at time-and-a-quarter (at 2s. 114.), totalling I ls. 8/d. He will now, therefore, have to pay £5 14s. 81d., instead of £5 3s., an increase of nearly 11.4 per cent. It is customary for these larger vehicles to be operated for more than 48 hours per week. Indeed, most drivers of this class of vehicle would take a dim view if they found that they were to work the 48 hours each week and no more, and I am not exaggerating if I take ,a 60-hour week as a basis for calculating the difference that this alteration in hours is going to make to costs.
At present the wage is made up of £5 35. for the 48 hours, plus eight hours at the time-and-a-quarter rate of 2s. 8M., which is £1 Is. 51d., and another four hours at time-ands-half, 3s. 2d., which is 12s. 10Id. The total is £6 17s. 4d. per week.
121 per cent. Rise in Wages That wage of £5 3s. is to apply to 44 hours. On top of that comes eight hours at time-and-a-quarter at 2s. 1114. (Li 3s. 5d.), plus another eight hours at time-and-a-half (3s. 6M.), making a total of £1 8s. lId., so that he must in all pay £7 14s. 61d. per week, a net increase of 17s. 2Id. per week in wages. The -percentage wage increase in that case is 121.
Now comes the question of the percentage increase in the cost of transport, and in calculating this there is much scope for argument. The cost of running a maximum-load sixwheeler 600 "miles per week, assuming a working week of 60 hours,' is the net figure in the latest issue of "The Commercial Motor" Tables of Operating Costs, which is E37 12s., plus overtime, £1 14s. 4d., making £39 6s.• 4d.
The increase in wages because of the alteration in hours has been shown to be 17s. 21d.; so that the net cost of running that vehicle -600 miles per week in a 60-hour week will be £40 3s. 61d. The percentage increase is rather more than 2 per cent. and not quite n per cent. If, therefore, this method of calculation be accepted, and if the cost of the transport of goods be directly proportional to the cost of running the vehicle, we might expect that the cost of transport generally would rise by approximately 21 per cent.
A Fair Assessment ?
Is that correct? I think io, but many operators may not. They may disagree and say that my standing charges are assessed on the basis of the hours the driver works per week. When he worked the guaranteed week of 48 hours they were based on 48 hours. Now they will be based on 94 hours and there will be some increases arising from that cause.
First, let us take the method of correcting the figures in The Commercial Motor" Tables of Operating Costs as already recommended, namely, that Id. in the shilling be added to the standing charges per hour. In that case. I must add 41d. to the 4s. 81d. quoted in Table VI as the standing charge per hour for a maximum-load six-wheeler. That brings it to 5s. lid. In fact, an addition of 41d. per hour in the case of a 60-hour week is £1 3s. 9d. per week.
Then there comes the question of establishment costs. Taking these to average £6 per week for a vehicle of that type, then on a 48-hour week that sum is equivalent to 2s. 6d. per hour, but on a 44-hour week it is 2s. 81d., a difference of 2td. an hour, and the increase for 60 hours is 13s, 9d. a week. Add that to 23s. 9d. and there is a total of 37s. 6d. a week because of the increase in standing charges and overheads. We must still add the 17s. 2Id. extra wages for overtime, making a total of £2 14s. 81d.
• Costs Increased by 8 per cent.
' The cost at present is £39 6s; 4d. After March' 1 it will be £42 Is. (ignoring the odd ld.). This is equivalent to a percentage increase of a little over 8.
The chief point to bear in mind is that it is the standing charges which are affected, and not the running costs. The extent to which establishment costs are affected, and, indeed, the extent to which standing charges, apart from wages, are influenced, depends largely upon the organization of the business. Considering the matter nationally, and having regard to the necessity of keeping costs down, the wisest plan for an operator is to reorganize his business to ensure the minimum standing charges and establishment costs.
In this connection, I learn that one big transport corn pany had already decided to reduce working hours from 48 to 44. This organization is concerned in the main with the delivery of parcels, and it seems likely that the company will turn over to a five-day week, as so many other businesses are ceasing to work on Saturdays that parcels delivery and
collection on that day is becoming of less importance. .
As clerical staffs are now moving towards the adoption of the 44-hour or 40-hour week, which again means the elimination of Saturday as a working day, it seems likely that this plan will appeal to many' more in the transport industry. That, unfortunately and inevitably, seems to mean that bOth standing charges and establishment costs per hour will increase by approximately 1/11, or 9 per cent.
Reduce Terminal Relays
For transport concerns handling other kinds of traffic, and especially those which are accustomed to working their vehicles in excess of the 48-hour week, this procedure is hardly likely to be practicable. In such cases there are two lines of development which will have to be followed. One is to take steps to ensure that standing charges and establishment costs per hour do not increase, and the other is to press for better loading and unloading facilities, so that there shall be the minimum of delay at terminals. If that were done, a bigger proportion of the hours worked by vehicles would be spent in running useful miles and not in waiting. That, in any case, is a development of the road transport industry which is long overdue.
Following what has already been stated about the incidence of the change of working hours in relation to standing charges, it is obvious that the effect of the change will be felt the most in respect of vehicles covering small weekly mileages. It may be of interest to go into figures in this connection by taking two simple examples and comparing results.
Charges for 6-tonner
Take, in the first case, a 6-tonner covering 180 miles per week. With the 48-hour week in force, such a vehicle costs £7 16s. 6d. per week in standing charges, plus £3 12s. per *week in establishment costs, a total of £11 8s. 6d. for fixed charges. The running cost, according to "The Commercial Motor" Tables of Operating Costs, is 8164d. per mile, which is £6 9s. 6d. per week, to the nearest penny. The all-in cost is thus £17 18s., which is equivalent, again calculating to the nearest penny, to 7s. 6d. per hour. There is no provision for profit in that figure.
When the alteration in hours comes into force the standing charges and the establishment costs presumably will still amount to the same, but will apply to a 44-hour week instead of a 48-hour week, and if the vehicle continues to run for 48 hours per week presumably the total of fixed charges will rise to £12 9s. 3d. In addition, there will be 'a small extra amount because the driver is paid overtime for the extra four hours, which will be 2s. Old. per week, so that the total of fixed charges now becomes £12 Its. 31d.
The running costs will not be affected by the change and will remain at 8.64d. per mile, or £6 9s. 6d. per week. The total cost is thus £19 Os. 91d. per week, which is equivalent to about 8s. per hour, and the percentage increase thus shown is between 61 and 61.
Effects of Mileage
Now take the case of the same type of vehicle and assume that it runs 600 miles per week of 48 hours. Taking first the cost in respect of the 48-hour Week, the fixed charges-the standing charges and establishment costs-will remain as in the previous example, namely, £11 8s. 6d. The running costs at 6.9d. per mile will total £17 5s. per week. The total cost is thus £28 13s. 6d., which is 11.47d, per mile.
Under the new conditions the fixed charges will again rise, as in the previous example, to £12 I Is. 31d., per 48-hour week. The running costs will be unaltered and the total will be £29 16s. 3ld., or f1.8d. per mile. The increase is thus 4 per cent.
It is possible to show that increases on transport costs may be anything from 2 per cent. to 8 per cent. It seems, therefore, that there will be an all-round increase approximating to 5 per cent. S.T.R.