In context: Four-day work week

Amid promises to pursue a wellbeing economy, the Scottish Government has confirmed it will begin pilots for a four-day working week shortly. The programme for government says these trials will help to “better understand the likely impacts on workers, businesses and the economy.”

So, what is it?

A four-day working week is exactly what it says on the tin. It would be a move away from the traditional five-day week, giving workers an extra day off. The arguments for such a move aren’t new. Discussions have long been had on how technology could be used to reduce working hours. But the Covid crisis has also caused more people to consider how to change the way we work. A recent survey by the IPPR thinktank found 83 per cent of people would support moving to a four-day week – assuming no loss of pay.

What are the arguments for it?

The big claim for reducing working hours is that it will improve individual wellbeing. In addition, it is thought this could help to drive up productivity and support innovation.

The IPPR survey found 85 per cent of people agreed it would have a positive effect on their wellbeing, while two-thirds felt it would improve Scotland’s productivity. IPPR researcher Rachel Statham said the move “could be a positive step towards building an economy hard-wired for wellbeing”.

The STUC’s Roz Foyer added: “If Scotland is serious about creating a wellbeing economy, then a four-day week is a key way to make progress towards it.”

International studies have shown some success here. Trials in Iceland took place between 2015 and 2019, and were deemed an “overwhelming success”. It found productivity remained the same or even improved. Now about 86 per cent of the country’s workforce have moved to shorter hours for the same pay.

Following this, a raft of other countries announced trials. A shorter six-week pilot in New Zealand found productivity increased by 20 per cent at participating firms. However, reports suggest that since then, only a handful of companies have taken up the opportunity to launch their own trials.

What are the concerns?

Cost and who bears the brunt of it is the biggest barrier to a four-day week. A survey by the Social Market Foundation found 80 per cent of workers would not back the move if it meant a loss to wages.

What would be the alternative?

Companies could cover the increased cost themselves, but this carries risk. Back in 2019 when the idea was floated by Labour, then CBI director Carolyn Fairbairn said: “Who would turn down a four-day week on the same pay? But without productivity gains it would push many businesses into loss.”

Another option would be to pass the extra costs onto consumers, but this would ultimately impact workers by making goods more expensive.

The last option is government subsidies, but the cost would soon mount up (as we have seen with the recent furlough scheme) and it is unclear how quickly such subsidies could end, assuming increased productivity is a knock-on effect.

Meanwhile, there is also a lack of information about how different sectors and companies would be impacted. Firms which have chosen to participate in trials are perhaps the ones most likely to already be trying to boost happiness and encourage innovation. In addition, surveys have found there is slightly less support for a four-day week among manual workers than office-based workers.

What is the plan in Scotland?

The Scottish Government intends to trial a four-day week without a loss of pay, backed by a £10 million fund to support participating businesses. That is all we know so far.

The IPPR has encouraged the government to ensure the pilot covers a range of sectors and a range of workers, including shift workers and part-time staff. But the thinktank warns the current fund may be “too small to assess impacts across a range of sectors on a sufficient scale”. It calls for enough cash to put 20,000 workers on a four-day week over a three-year period.

However, what comes after any successful trial is also a problem. Employment law remains reserved to Westminster so the move would need to be backed by the UK Government. It has, so far, made no indication that it intends to launch pilots of its own.

The SNP’s recent manifesto acknowledged this, pledging to “use the learning from [the pilot] to consider a more general shift to a four-day working week as and when Scotland gains full control of employment rights.”