Britain has experienced the worst decade for productivity growth since the 18th century, according to Bank of England records released recently. Centuries of economic data held by the Bank showed stagnating growth over the last ten years has been almost unparalleled in UK history. But the same isn’t true for some of our European counterparts.
Productivity per hour is higher in both Germany and France, where it continues to increase, according to Eurostat. Yet, the average EU worker worked for just 41.4 hours per week compared to the 42.8 hours the average British worker put in per week. It seems less is most definitely more.
In France, the working week has been getting shorter since the 1980s. Today, 35 hours is the point at which overtime pay kicks in, creating an economic incentive not to exceed this, to keep labour costs down. The French government has also introduced tax breaks for employers to encourage them to implement the 35-hour week.
In Germany, IG Metall, the country’s biggest union, has been the biggest backer for a shorter week. In the 80s, it called for a 35-hour working week, and finally this year - after decades of campaigning - some German workers have begun to experience a four-day week.
There needs to be a strong business case for such initiatives. Reducing the working week can yield costs savings and evidence is also emerging that happier workers, who have a better work-life balance, are not only more productive but they also feel more of a commitment to their employer. It is the employer’s responsibility to look after the physical and emotional wellbeing of its employees, which has been shown to improve the performance of an organisation as a whole.
Examples from Sweden established a causal link between increased happiness and increased productivity. In 2015, as part of a government-funded trial, nurses at the Svartedalens retirement home in Gothenburg began working six-hour days without any decrease in salary. A year’s worth of data from the project (which compared with a control group in a similar workplace) showed that the Svartedalens nurses took half the amount of sick time and they were nearly three times less likely to take any other time off in a given two-week period.
Perpetual Guardian, a New-Zealand company that manages trust and wills, also trialled a four-day week and had similar results to Svartedalens. 78 per cent of employees at the company reported they were better at managing their work-life balance over a four-day week. As a result, they felt better about their job, were more engaged and less stressed. Significantly, employees enjoyed these benefits without any loss in productivity. The employer also profited from enhanced reputation, recruitment and retention, and energy savings with 20 per cent fewer staff in the workplace.
It seems that if we can achieve five days output or - as in the Svartedalens example - increase productivity in just four days - then there’s a compelling argument to reduce the working week and it’s a win-win. Not only may this be one of the answers to the UK’s productivity crisis, but it could also mean an increase in people’s leisure time and spending on leisure activities, potentially increasing sales for the travel, tourism, retail, hospitality and leisure sectors.
However, if the four-day week really means reducing our productivity and earning to just four days’ pay, this would be a counter-productive move and could cause significant hardship to many, especially those on the minimum and low wages. There are certainly challenges to be overcome in introducing a shorter working week effectively, not least the challenge of measuring productivity among different teams who do different jobs. Most businesses are comprised of a complex structure of interdependent teams, suppliers and functions. So how do businesses begin to implement a four-day week and reap the apparent advantages?
1. Involve all staff from the outset by communicating the intention to reduce working hours and reassuring them that the objective is improved work-life balance and higher productivity, not an underhand scheme to reduce costs. They need to trust you.
2. Optimise the use of technology. Identify jobs and roles that do not require a human interface, and explore AI solutions.
3. Develop recruitment and retention strategies that emphasise this new benefit. This will position you as a great employer.
4. Ensure fit-for-purpose performance management approaches that clearly articulate expectations in terms of desired outcomes, rather than presenteeism.
Kate Cooper is Head of Research, Policy & Standards at the Institute of Leadership and Management