From June to December 2022, 61 firms in the UK took part in a 4-day work week trial. In this trial, workers worked fewer hours and received the same pay. Recent research has suggested that the 4-day work week can help solve the UK’s productivity puzzle[i] and boost economic growth.
Who are 4 Day Week Global?
4 Day Week Global is a non-profit organisation who aims to introduce a 32-hour working week around the globe and put an end to the current 40-hour work week. They want to inform employers and employees about the benefits of a 4-day work week, which include: less stress, boosted productivity, a better work-life balance and much more. They also organise pilot trials where firms can test the effectiveness of a 4-day work week, as well as providing guidance to firms to encourage others to adopt similar measures. The organisation has helped raise interest across the world, with many countries exploring the policy and committing to business trials.
What are the benefits of a 4-day Work Week?
Working less hours means workers have a better work-life balance, thus, they are less stressed and have more free time to pursue their own interests, improving their health and wellbeing. This could create a more motivated and productive workforce, which in turn increases job satisfaction and worker retention, reducing recruitment and training costs for firms.
Higher productivity also means firms have lower average costs which raises their profits, providing them with the means and motive to expand. Subsequently, unemployment is lowered, and average incomes increase. This can help spark a positive multiplier effect[ii] in the economy, where consumers can gain better material living standards[iii] and producers benefit from extra demand and profits. In addition, the government receives a fiscal dividend[iv] as tax revenues increase and expenditure on welfare benefits fall. The extra income can be used to invest in public services such as healthcare and education, as well as infrastructure projects, generating positive externalities, improving living standards and boosting economic growth.
In a recent report published by academics at Cambridge and Boston universities, the 4-day week trial in the UK was found to be a success. 92% of the companies involved have decided to keep the 4-day work week beyond the trial. Across the board, business performance and productivity were maintained while company revenues rose 1.4% on average, even though the economy deteriorated whilst the trial was ongoing. Employees experienced a better standard of living with 71% reporting less levels of burnout and 65% less total sick days taken off during the trial. There was also a 57% lower likelihood of workers quitting with job satisfaction improvements.
Between 2015 and 2019, Iceland held the world’s first 4-day work week trial with 2,500 workers participating. The trial was a success and led to the government introducing a 35-hour work week. As a result, in 2019 Iceland saw a 3.1% growth in labour productivity rates whereas in the same year, the UK only saw a 0.3% increase in labour productivity rates.
Why might the 4-day work week not be suitable for all?
The 4-day work week cannot suit all industries as some require long shifts from their workers. These can include emergency services and logistics. Many firms in these areas may experience increased costs as more staff or more overtime hours will be needed to cover a varying workload.
Furthermore, some workers may prefer to stay on the 5-day work week as the pace of work is slower. Working less hours whilst maintaining the same level of work may increase stress, which damages health and wellbeing.
At the moment, due to the vast labour shortages in the UK, many firms simply cannot afford to give their employees more time off, as it can lead to a loss of output. Working fewer hours can also worsen customer satisfaction, as they may not always be able to, for example, access customer services, which can reduce a firm’s competitiveness and market share.
Many are also worried about employees taking up second jobs in order to supplement their income and productively use their newfound spare time, which can reduce attention and productivity in their current job. Moreover, for some occupations, such as teaching, measuring productivity may be subjective, thus some results found by research trials may be misleading.
Footnotes:
[i] UK’s Productivity Puzzle - While GDP and employment have risen, since the 2008-2009 financial crisis, the UK’s productivity has stagnated. It is difficult to pinpoint the exact reason why, but some theories suggest it comes down to a lack of investment.
[ii] Positive Multiplier Effect - An initial injection (government spending, investment and/or exports) into an economy’s circular flow causes a larger than proportionate final increase in national income.
[iii] Material Living Standards - Refers to a consumers access to goods and services.
[iv] Fiscal Dividend - The government receives a fiscal dividend when there is economic growth, leading to an increase in tax revenue and a decrease in spending on unemployment and poverty related welfare benefits.
Bibliography:
World Economic Forum - The world's biggest trial of the 4 day work week has come to an end.
