4-day work week trials termed huge success, but 4 big Qs need answers

By: Anthony Veal

A little more than a century ago, most people in industrialised countries worked 60 hours a week. A 40-hour work week of five eight-hour days became the norm, along with increased paid holidays, in the 1950s. These changes were made possible by massive increases in productivity and hard-fought struggles by workers.

In the 1960s and ‘70s it was expected that this pattern would continue. It was even anticipated that, by 2000, there would be a “leisure society”. Instead, the trend towards reduced working hours ground to a halt. But now there are suggestions we are on the cusp of another great leap forward – a 32-hour, four-day week for the same pay as working five days. This is sometimes referred to as the “100-80-100” model. You will continue to be paid 100% of your wages in return for working 80% of the hours but maintaining 100% production.

In Spain and Scotland, political parties have won elections with the promise of trialling a four-day week. Hopes of the four-day week becoming reality have been buoyed by glowing reports about the success of four-day week trials, in which employers have reported cutting hours but maintaining productivity.

However, impressive as the trial results may appear, it’s still not clear whether the model would work across the economy.

An employer-led movement

Unlike previous campaigns for a shorter work week, the four-day workweek movement is being led by employers, notable among them is Andrew Barnes, owner of a New Zealand financial services company, who founded the “4-Day Week Global” organisation. It has coordinated trials in Australia, Canada.

Ireland, New Zealand, the UK and the US involving almost 100 companies and more than 3,000 employees. These trials are being monitored by research teams at Boston College, Cambridge University, and University College Dublin. The Boston College team is led by work-time/leisure-time guru Juliet Schor, author of the 1991 bestseller ‘The Overworked American’. A number of reports have been published, including one covering all six countries, and separate reports for the UK and Ireland. Overall, these reports have declared the trials a “resounding success” – both for employers and employees. Employees reported less stress, burnout, fatigue and work-family conflict, and better physical and mental health. More significant were the employers’ responses. They have generally reported improved employee morale and no loss of revenue. Nearly all have committed to, or are considering, continuing with the four-day-week model.

Four big questions

The trials do not, however, answer all the questions about the viability of the four-day week. The four main ones are as follows. First, are the research results reliable? Employers and employees were surveyed at the start, halfway through and at the end of the six-month trials. But only about half of the employees and two-thirds of employers completed the vital final round. So there’s some uncertainty about their representativeness. Second, did the participating firms demonstrate the key productivity proposition: an increase of almost 20% in output per employee per hour worked? The firms involved were not asked to provide “output” data, just revenue. This may be a reasonable substitute. But it may also have been affected by price movements. Third, for those firms that achieved the claimed productivity increase, how did it come about? And is it sustainable? Proponents of the four-day week argue that employees are more productive because they work in a more concentrated way, ignoring distractions.

A much longer period than six months will be needed to establish whether this more intense work pattern is sustainable. Fourth, is the four-day model likely to be applicable across the whole economy? This is the key question, the answer to which will only emerge over time. The organisations involved in the trials were self-selected and unrepresentative of the economy as a whole. They employed mostly office-based workers. Almost four-fifths were in managerial, professional, IT and clerical occupations. Organisations in other sectors, with different occupational profiles, may find increased productivity through more intensive working difficult to emulate. Take manufacturing: only three firms from this sector were included in the large UK trial. Since manufacturing has been subject to efficiency studies and labour-saving investment for a century or more, an overall 20% “efficiency gain” to be had across the board seems unlikely.

The productivity gains achieved in office environments may harder to replicate in other settings such as manufacturing. Then there are sectors that provide face-to-face services to the public, often seven days a week. They cannot close for a day, and their work intensity is often governed by health and safety concerns. Reduced hours are unlikely to be covered by individual productivity increases. To maintain operating hours, either staff will have to work overtime or more staff would need to be employed.

As for the public sector, in Australia and other countries “efficiency savings” involving budget cuts of about 2% a year have been common for decades. Any “slack” is likely to have been already squeezed out of the system. Again, reducing standard hours would result in the need to pay overtime rates or recruit extra staff, at extra cost. This does not mean the four-day week could not spread through the economy. One scenario is that it could spread in those workplaces and sectors where productivity gains are achievable.

Those employers and sectors not offering reduced hours would find it harder to recruit staff. They would need to reduce hours, perhaps by stages, to compete. In the absence of productivity gains, they would be forced to absorb the extra costs or pass them on in increased prices.

The pace at which such change takes place would depend, as it always has, on the level of economic growth, productivity trends and labour market conditions. But it is unlikely to happen overnight. And, as always, it will be accompanied by many employers and their representatives claiming the sky is about to fall in.

- Anthony Veal is an Adjunct Professor, Business School, University of Technology Sydney