Four-day week may sound good, but it's not quite as simple as it might seem – John McLaren

A recent study on the impact of a four-day working week on staff performance and well-being levels provided an intriguing set of results that could have significant implications for the labour market.

It also raised the question of whether or not such a shift could help address the slump in productivity growth that has afflicted the UK, and many other countries, since the financial crisis of 2009. The report stood out in a number of ways compared to past studies. First, it covered 61 companies across a spectrum of industries, from school settings to manufacturers. Second, it was planned and assessed by academics from respected institutions. Third, the outcomes were pretty consistent from both the employee and employer perspectives.

The main findings were that most of the trial companies expected to continue with the four-day week, as participants were happy with the outcomes, which included no loss of output from the shortened working week. In other words, a variety of ways had been found to improve productivity and efficiency such that companies had not lost out by maintaining pay whilst cutting hours. In addition, employees’ life satisfaction levels rose and sick leave fell.

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So things look pretty good, but what reservations might still apply? First, the actual average reduction in work hours was four hours, not eight, from 38 to 34 hours a week. This was for a variety of reasons, not least the fact that 15 per cent of employees reported an increase in their hours worked.

Second, the comparison period for changes in measures like revenue and well-being was the second half of 2021, a period when Covid and furlough were still having a significant impact on personal and business conditions. Disentangling the impacts of a shift to a four-day week and a shift out of the pandemic is likely to be difficult and is not attempted in the report.

Third, any such ‘no loss’ results might not be available in all settings. For example, in occupations like hairdressing or parcel delivery, cutting down on team meetings and coffee breaks may not be relevant. Equally, how might such a shift impact on the pay and working week of part-time staff and how would changes be coordinated with a ‘normal’ school week, whatever that turned out to be.

Fourth, the choice of companies in the study is self-selecting, which means that only companies that think it might work would put themselves forward in the first place and so there is a bias towards the initiative succeeding compared to a hypothetical study of all companies. Furthermore, only 24 of the 61 companies provided data to allow for a comparison of how revenues shifted over the experiment period, which is a further degree of self-selection.

Fifth, there is the ‘reverting to mean’ experience, whereby new initiatives can work for a while but eventually old practices start to seep back in and some of the original gains are lost. Alongside this is the clear worry that, once attempted, there is no going back, in other words returning to a five-day week, for no extra pay, would be nigh on impossible. Sixth, due to the selection issues referred to above, there is more chance that better-paid jobs can make the transition than poorer-paid ones, which could exacerbate the inequality already seen in pay and conditions.

Countries like Iceland have been promoting shorter working weeks (Picture: Jeremie Richard/AFP via Getty Images)Countries like Iceland have been promoting shorter working weeks (Picture: Jeremie Richard/AFP via Getty Images)
Countries like Iceland have been promoting shorter working weeks (Picture: Jeremie Richard/AFP via Getty Images)

All of this suggests that there is still a lot more work to do in taking this idea forward in a coordinated way across the economy and it is disappointing that the report did not do more to acknowledge such challenges.

So, what impact might such a move have on productivity? Clearly, productivity per hour improves substantially if the same amount of output is being delivered in less time. So there will be a one-off improvement.

However, this change in the working week is unlikely to lead to the re-ignition of a faster annual productivity growth rate. Why? Because the underlying conditions will not have changed. Business investment will not have grown and so capital levels will be similar, as too will skill levels.

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Such a one-off increase in productivity would allow for another option, which is to keep the five-day week and turn such gains into higher wages instead. This might be a more attractive proposition to some employees, especially in an era when ‘real’, ie adjusted for inflation, wages are stagnant.

At present, the nearest we have to anything like this happening on a national scale is in Belgium. Employees there have won the right to perform a full working week in four days without loss of salary. However, this does not involve shorter hours, just condensing them into fewer days, which raises the question of exactly how productive the ninth and tenth hours of each working day will be and what stress levels will be like by the end of the four-day week. Or is the extra free day a Wednesday rather than a Friday or Monday, in order to split the working week up?

Other countries, like Iceland, have promoted shorter working weeks and, in Lithuania, public-sector employees with children under the age of three are allowed to work 32 hours a week without any reduction in their pay.

So there are many options available and an increasing number of countries, including Scotland later this year, are looking to implement, and learn from, trials. A shorter working week appears to be the general direction of travel, although where it will end up, how quickly it will happen and what impact it will have on inequality, remains highly uncertain.

John McLaren is a political economist who has worked in the Treasury, the Scottish Office and for a variety of economic think tanks



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