I remember that you were being frustrated about incentivising to people to give their citizens free time, instead of just working them to the bone and then giving them a break. I think I have a solution to this.
Tech development is linked to free time, along with education and other factors.Now, advances in technology historically happened when people had free times to do things, not go constantly hunting for food. So, when agriculture was invented, it set off technological development. This could work in Clockwork Empires. Other things like education could play a factor too. Say, you have 2 educated citizens having a chat. Their thoughts turn to the latest scientific developments of the day. They talk, and based on chance, 3 things could happen
1.Nothing, but both would feel better. This would be a 80-90% chance.
2.They come up with a small improvement to a existing technology(9-19% chance, more on this later)
3.They come up with something totally new.(1% chance)
So say they come up with something new. This could vary depending on many conditions, like what may be a problem, what they like, what they were talking about recently, etc. So say lots of food is rotting due to not being able to store it in a cool place, the person likes ice cream or something cold, and they were talking about winter back in the home land. The guy might say, think of a refrigerator. Now, he sprints off and finds a workshop, similar to a dwarf fey mood, and starts prototyping. Depending on his education, the materials available to him, and the quality of the workshop, he produces something of varying quality. If he's super educated and everything is available to him, and he has lots of free time, he will produce something amazing. If he has none of those things, not so much. Anyways, unlike a fey mood, he will leave his prototyping to work if he needs to. The trick about this, is the player will not be notified about this until the invention is complete. The citizen will work on this in secret, you might see him putting something together but you will not be notified. Therefore, this can go 2 ways. You have loads of free time and great materials for science, and he makes something great. Or, you're busy churning out gears to produce steam cannons, and he needs to be working nearly all the time, and makes something shitty.
Improvements would work the same way, except the prototyping stage would be much shorter. They would improve a exist technology you had, for example, someone thinks of a way to add a steam piston to a axe to make it swing much faster. You can now cut down tree's faster. The improvement amount would, again, depend on the amount of quality materials you had and free time.
Now, the normal rough and tumble people could not possibly think of something like this. You need educated people who can think SCIENCE! Therefore, you need schools, libraries, and very late game, when you have paved streets, you can maybe get a university. Libraries would be a "Passive" educator. People who have high ambition, are naturally curious, or are interested in self improvement, will go to the library to get educated. People who are not interested in education will visit the library to get a general morale boost from reading the latest thriller or detective story. Schools are a "Active" educator. They educate the children your colonists have, and make sure they know something. Otherwise you get illiterate peons who's only use is to ship off to the coal mines. All the colonists you start with would be literate, but later on you might want to educate any immigrants who are not. However! Schools and Libraries require free time to be effective! Children in poor families will NOT go to school, and instead go off to the coal mines and work there to earn money so they can purchase food and such. Unless you institute child labor laws and mandatory schooling, but the expendable tykes are just small enough to get to that last bit of coal
. Late game you have the university, which is a very high level of education and research. If you have a university, you can tell people what they want to work too. In addition, a university is the highest quality workplace available to prototype something. People will still have chance discoveries, of course.
Now, this lets you choose how you want to play. Do you want slow technological progression, with bad quality inventions, but to produce tons and tons of stuff? Or do you want to have generous amounts of free time and very fast technological progression, but be a substandard producer?