Labour market reforms - Four-day week 'a success' in Iceland

Does cutting the working week help to improve productivity? Here is a good story to link to your study of labour market economics.

A four-year study involving 2,500 people - or 1% of Iceland's workforce has found that switching from the standard 40 hour working week to a 35 or 36 hour working week with workers still getting the same pay, has not had a negative impact on productivity.

Indeed in some cases, it has improved the measured efficiency of those employed whilst creating the positive spill-overs associated with a better work-life balance.

The trials, in which workers were paid the same amount for shorter hours, took place between 2015 and 2019.

A number of countries are experimenting with reducing the length of the working week and numerous companies are recalibrating both the hours expected from full-time employees together with the split between working from home (WFH) and being based in the office.

It is another aspect of our post-pandemic economy that is worth keeping an eye on.

Public opinion in the UK seems favourable to the idea of trimming working hours. It might be worth noting that cutting hours from 40 to 35 and reducing the working week to four days instead of five also implies working some extra time on the remaining days!