A century ago, economists believed that increases in economic productivity would lead to drastically shorter working weeks by the beginning of the 21st century. Although these predictions have not yet materialised, recent years have seen an increased interest in instituting a 4-day work week. Alec Haglund, IF Researcher, discusses how a 4-day week might benefit young people and contribute to solving intergenerational fairness issues.
Who benefits from increased economic productivity?
In 1930, economist John Maynard Keynes predicted that the average working week would only be about 15 hours in 2030 due to improvements in productivity. Global economic output has grown almost fifteenfold since then, in no small part due to technological developments and improvements in productivity.
For a short time period, it seemed that Keynes’ prediction might not be too far off. Although working hours were only somewhat reduced, workers in the Western world saw real wages increase in line with productivity for a few decades in the post-war era. However, since the late 1980s, real wages have not risen in line with increases in productivity, and this has also not been offset by offering shorter working weeks without loss of pay instead.
Has the political environment changed?
It is now over a century since the social movement demanding an eight-hour working day began to make its mark. While working hours have not drastically changed since the Second World War, post-war generations have benefited from continuously increasing wages which have improved their standards of living.
Even though productivity has increased since the 1980s, workers who are under 45 years of age have never experienced an economy where increased productivity leads to either improved real wages or more leisure time. In most cases the five-day eight-hour working week is still the norm, with many young people having to work even longer hours in order to cope with the rental and cost-of-living crises.
However, recent years have seen a renewed interest in the demand for more leisure time. In the fast-paced, non-stop, on-demand economy of today, leisure time is as important as ever. More young people are asking for a better work-life balance, recognising the social, mental and environmental benefits of a shorter working week.
Environmental benefits
It is difficult, if not impossible, to decouple economic growth from increased environmental degradation. This is because even “green growth” leads to material output increase and an increase in energy usage. The effect is compounded annually – even low levels of growth can have massive long-term effects on material output and the sustainability of ecological cycles.
This is not to say that improvements in standards of living for future generations are off the table. Rather, it means that we ought to reconsider what contributes to a good standard of living in the 21st century. One option is to focus on ways to increase our happiness without solely relying on ever-expanding material output to measure well-being.
By embracing more leisure time with a 4-day week, we could: spend more time with family; undertake artistic pursuits; exercise more; or just catch up on sleep and life administration without stress. Let’s not forget the environmental benefits that come from a 4-day working week, such as lower emissions from commuting and other energy and material usage associated with work.
Mental health and social benefits
In a large 4-day work week trial in which 61 companies participated, it was reported that 39% of employees felt less stress and 71% reported lower levels of burnout. Additionally, issues such as anxiety, fatigue and sleep issues decreased for employees, with many also reporting a better work-life balance and an increased ability to manage care responsibilities alongside work.
At a time when mental health issues are increasing but the government is not spending enough on young adult mental health, a 4-day week could have immense positive effects for tackling our mental health crisis without any cost to the tax-payer.
Economic benefits
British employees are already working two and a half weeks longer than the European average, and many European countries with shorter working hours are also far more productive – German and Danish employees have much shorter working weeks but are 14.6% and 23.5% more productive, respectively. Indeed, most research on the topic reveals that total output does not decrease when instituting a 4-day week, since employees are more rested, more creative, and healthier when working a 4-day week, leading to increased productivity whilst working.
Moreover, trials have shown that a 4-day week improves staff retention, as the number of staff leaving during that trial period decreased by 57%. Furthermore, the number of staff calling in sick fell by approximately two-thirds. Improving staff retention and reducing sick days taken by employees can also lead to substantial savings by employers. In short, a 4-day week could benefit the economy, workers, and employees.
A reason for caution
While all the research and results from trials suggest that moving to a 4-day week would be highly beneficial for society as a whole, it does not mean that it is easy to implement across the economy. Different forms of implementation would have to be considered in order to ensure that a 4-day week is beneficial for all in society, independent of age, income or industry.
Nor should a 4-day week lead to loss of pay. Lowering pay would negate the purpose of employees gaining more leisure time from productivity gains that have occurred over the past decades. In some industries it might be easier to move to a 6-hour day instead of a 4-day week, and in more seasonal work the time-off can be staggered over less busy periods.
Make the economy work for young people
There is no one-size-fits-all policy. But what is clear is that shorter working weeks with no loss of pay would be beneficial for society as a whole. It is an intergenerational injustice that young people have never lived at a time when productivity gains led to increased leisure time or increased real wages, given that this was the norm for previous generations. It is time we make the economy, the environment and social well-being, work for young people today as well as those who come.
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Picture courtesy of Sarah Brown on Unsplash