The four-day work week on Corona Business Insights

This transcript is the product of an artificial intelligence - human collaboration. Any mistakes are the human's fault. (Just saying. Accurately yours, AI)

Intro From the University of Sydney Business School, this is Sydney Business Insights.

Sandra And this is Corona Business Insights. I'm Sandra Peter.

Kai And I'm Kai Riemer.

Sandra And with everything that's happening out there, it's difficult to understand what COVID-19 will mean for the business world. So in this series, we've been unpacking its impact on business, economy, industry, government, workers and society, and looking at the effects of the pandemic.

Kai And this podcast is, of course, part of a larger initiative by the University of Sydney Business School. Our COVID business impact dashboard is a living initiative which we constantly update with insights and resources from academics, from industry experts, from Nobel Prize winners, and movers and shakers.

Sandra And you can find all of this resources online at sbi.sydney.edu.au/coronavirus.

Kai Today, we talk about how the COVID-19 pandemic sheds new light on the ideas of the four-day work week.

Sandra So the four day work week has been in the news recently, given that the Singapore parliament has been tabling the notion that people would be better off with a four day work week than with the traditional Monday to Friday work week, as well as a Facebook stream by New Zealand's Prime Minister Jacinda Ardern who mused about the idea of a four day work week recently, saying that it might help domestic tourism as well as provide more flexible working arrangements for the New Zealanders, who could also then boost tourism by travelling more on their three days off.

Kai So the four-day work week is really one of those topics, a little bit like universal basic income. They have been around for a while. They've been a fringe idea. They've been tested by a few companies successfully. So, Microsoft has trialled it, there's a few smaller companies who have employed it, but it's never really made its way into the mainstream. And so, the COVID-19 pandemic provides a new impetus for rethinking, or shedding new light at a lot of these initiatives that are coming up. So, we want to have a look at what the four day work week actually is, how it relates to the pandemic, and what it can do to find different ways of working.

Sandra It is helpful to begin with clarifying just what the four-day work week might entail, because the different initiatives in different countries have put this forward for different reasons, and have put forward different variants of the four day work week. So while some have been talking about reducing the number of hours that we work from, say, 40 hours or 37 and a half hours a week down to 30 hours a week, other proponents have just insisted on doing more over the for these that we would be at work. So working, for instance, 10 hour days, so the amount of work would not change.

Kai And also the motivations are different ones. So one motivation would be to distribute what is now less work in society as we come out of the pandemic on more shoulders rather than having people lose their jobs. Others make an argument around work life balance. And there's also arguments that precedes the discussion on the pandemic, which would talk about prolonging one's work life, having a later retirement, but working less every week over the course of one's work life. So we thought we look at each of these different proposals, and have a look how they are different.

Sandra So first, let's have a look at the volume of work argument, because this is how the conversation has now resurfaced in the wake of the COVID-19 pandemic. But let's not forget, this has always been an argument during times of economic struggle. So the first time this argument has surfaced was during the Great Depression, Kellogg actually shifted to a 30 hour work week model during the Great Depression. But this was also the time where we cemented the move from the six-day work week to the five day work week, to ensure that more people have access to work when there was a lot less work to go around.

Kai So the argument is really that now that we're coming out of the pandemic, there's less work to be done. And rather than having people lose their job, we distribute what is now less work on more shoulders. This is actually a concept that has been around in my home country, Germany, for quite a while under the label of 'Kurzarbeit', which literally means short-work, where companies in an economic downturn can decide to reduce the number of days everyone's working, at a reduced pay, to keep jobs and keep the workforce in place so that they don't have to fire and then rehire, retrain and all these kinds of things. So really a way to cope with a crisis.

Sandra But there are also more permanent arguments, such as the productivity and cost argument. And there are a number of pilot studies and some research emerging that says that if we do reduce the number of hours we work every week, for instance, from a 40 hour work week or thirty seven and a half hour work week, down to a 30 hour work week, this will increase worker productivity and will also help with work life balance. And indeed, we had a look on The Future, This Week podcast a couple of years ago at the New Zealand finance company that had actually reduced the number of hours that its employees work down to a 30-hour work week. The company, called Perpetual Guardian calls it the 100-80-100 model. That is 100 percent productivity for 80 percent time at 100 percent salary. And employers had reported significantly better work life balance, lower job stress. They reported having a higher job satisfaction, being more engaged, but also managers reported the same level of productivity. Furthermore, they found people being more creative, more engaged at work, providing better customer service, being more helpful to their colleagues.

Kai And this has also been echoed by a pilot project at Microsoft in Japan, where they did a similar thing and they reported productivity increases of up to 40 percent. And let's not forget that there's also a cost argument to be made when people are in the office 20 percent less then certain running costs for electricity, for consumables, will go down by about 20 percent.

Sandra So less toilet paper.

Kai So less toilet paper, for example, very important during a pandemic. But also, if this is a permanent measure, there could be desk-sharing and less real estate footprint.

Sandra Not only that, but it might also lead to a lower cost for the climate. A white paper published back already in 2006 made the case that if, for instance, the US adopted European working hours, that is shorter working hours, American carbon emissions would have fallen over the next 10 years by about seven percent to the levels of 1990. And that would have been enough for the US back then to meet the targets set forth in the Kyoto Protocol. So a similar argument could be made now that those long commutes wouldn't occur on a day a week for a very large number of employed people, could make a significant change in the climate cost of commuting.

Kai And so that points to the third argument, which is actually just a variant of the second one, which we might call the less commute argument, where we don't reduce the number of hours in a week necessarily, but we squeeze those same work hours into less days. So instead of doing five eight-hour workdays, we now do four 10 hour workdays. Which means we work for the same amount of time, but we don't have to commute to work five days a week, which, you know, reduces the setup costs, especially in cities like Sydney, where many people have a long commute, that might actually be good for employee wellbeing, and it might also give them that day off which they can use for other things.

Sandra So this compressed schedule argument also raises the important point of the types of jobs that we're looking at. Because for certain jobs, for instance office jobs, moving to a 10-hour day might not make a big difference to the work that is required, for instance, physical labour or blue collar jobs, a 10 hour shift instead of an eight hour workday would leave people significantly physically more drained. And a couple of studies out of Western University's Ivey Business School have shown that this leads to a decrease in productivity, unlike the increases in productivity that we've observed with other types of four-day work weeks.

Kai And this also brings us to our fourth argument, which is the lifetime argument. Especially in physically taxing jobs, like many blue collar occupations such as nursing and construction, a five day work week can be quite strenuous, which often leads to early retirement, to people not coping, working into old age, and then having to transition into what is often at mentally challenging retirement period. So there have been proposals, such as out of the UK, and we'll put some material in the shownotes, which suggests that if people forfeit five years of their retirement, so work five years longer overall, they could enjoy a three day weekend for 20 of those work years. So working the same amount of work over one's lifetime, but spreading it out for longer and doing it only four days a week. So again, less hours in a week, maybe less pay, but then stretching it longer into retirement. Significantly improving work life balance or physical health in the case of physically taxing occupations.

Sandra And we discussed this quite extensively on The Future, This Week a couple of years ago, and especially how this would alleviate not only the inequality of wealth that many Western countries are experiencing, but also the inequality of leisure. That is not just the inequality that exists between the well-off and not so well-off, but also that exists between the old and young and middle-aged people in the amount of time off that they get.

Kai So, again, the four day work week, as it is now discussed as part of the response to the COVID-19 pandemic, is a very complex concept that might help with some aspects of the pandemic, such as avoiding redundancies, keeping people in jobs, but also potentially to spread out people when we return to the office. If we only work for four days a week, we have less people to accommodate, so that would help immediately with social distancing at work. But it is also important to keep track of which line of argument are following when we talk about four-day work week and what it actually means.

Sandra And in all conversations around the four day work week, the question remains in the end, who goes first and how do people follow? Because this can only work if there is a critical mass of companies doing this. Let's remember the move to the five day work week that Thomas Ford put forward with the Ford Motor Company, that was a very large corporation and many followed suit. It might be the same now if the large tech companies are the first movers, or if governments, indeed like we've seen with Singapore, shift a openness to embrace or to put in place policies that would make it easier for companies to pilot and trial out the four day work week.

Kai So, once again, as with many topics we're discussing on Corona Business Insights, it becomes a question of never waste a good crisis or panic and neglect. Is this the moment where we can actually introduce some of those ideas? Or are we going back to modes of work that we were used to before the pandemic.

Sandra And this is where we want to leave it today. Until next time. This was Corona Business Insights.

Kai Thanks for listening.

Sandra Thanks for listening.

Outro From the University of Sydney Business School, this is Sydney Business Insights, the podcast that explores the future of business.