Mon Feb 14

There's never been a better time for Australia to embrace the 4-day week

Written by John Quiggin, Professor, School of Economics, The University of Queensland

The disruption of the COVID pandemic has led many of us to reconsider our relationship to work, as well as our spending priorities.

Some are eager to return to pre-pandemic “normality”. Others have found working from home to be liberating and are keen to preserve their newfound autonomy.

Still others, such as health workers, are simply exhausted after two years dealing with the ever-changing demands of the pandemic. One manifestation of this exhaustion has been the rise of the “anti-work’ movement ^[1]”, which rejects the whole idea of paid employment as a way to organise necessary labour.

A less radical response is increased interest in the idea of a four-day working week. A growing number of companies – typically in technology or professional services – are embracing the idea ^[2].

Unlike the end of paid work, a four-day week is well within the realm of economic feasibility. But how much, if anything, would it cost in terms of lost production and lower wages?

How did we get to a five-day work week?

In 1856, Melbourne stonemasons became the first workers in the world to achieve an eight-hour working day. It’s a landmark we commemorate with a public holiday in most states and territories (called Eight Hours Day in Tasmania and Labour Day elsewhere).

It took almost a century before the eight-hour day became the norm, and for the six-day week those stonemasons still worked to be reduced. But finally, in 1948, the Commonwealth Arbitration Court approved a 40-hour, five-day working week for all Australians.

A five-day week brought us that great boon, the weekend. Thanks to steady increases in productivity, all this was achieved even while living standards improved steadily.

Increases in leisure continued over the next few decades. In 1945 Australian workers were granted two weeks’ annual leave. This was extended to three weeks in 1963, and to four weeks in 1974 ^[4]. Sick leave, long service leave and an increased number of public holidays all reduced the number of hours worked per year.

But the standard work week remained fixed at five days.

In 1988, the Conciliation and Arbitration Commission cleared the way for the working week to be cut from 40 to 38 hours ^[5].

Unionised workers in industries such as construction were able to negotiate slightly shorter hours – 36 hours a week – that made a nine-day fortnight possible (by continuing to work eight hours a day). So while they were still doing the same daily hours as in the 19th century, they were working about one-third fewer days a year.

All this progress came to a halt with the era of microeconomic reform (often called neoliberalism) beginning in the 1980s.

There has been no significant reduction in standard hours since. The actual number of hours worked has ebbed and flowed according to the state of the labour market, but without any clear trend. Employers have consistently favoured longer hours for their core full-time workforce, while workers and unions have pushed for better work-life balance.

Benefits and costs

Some Australian workers already work a nine-day fortnight. (There are no solid numbers on how many, but Australian Bureau of Statistics data suggests ^[6] it is fewer than 10% of the workforce.) For these workers shifting to a four-day week would reduce their total hours worked by a little more than 10%.

There is a lot of evidence to suggest that reducing working hours, if implemented correctly, can be partly offset by an increase in output per hour. Large-scale trials in Iceland reducing weekly hours from 40 to 36, for example, found no drop in productivity ^[7].

About 2,500 workers participated in two Icelandic trials that involved reducing the standard working week from 40 hours to 35 or 36 without reducing pay. Shutterstock

However, despite some optimistic claims, there is insufficient evidence to show there will be no reduction in output in all circumstances.

A plausible guess is that reducing hours by 10% will be associated with a 5% reduction in output.

If this cost were shared equally between employer and employee, workers would have to forgo wage increases of 2.5%. This would correspond to somewhere between two and five years of real wage growth based on recent history in Australia.

The cost to employers would reduce their profits. But over the past 20 to 30 years the share of national income going to the owners of capital as profits ^[9] (instead to labour as wages and salaries) has increased considerably. This cost would be just a fraction of those gains.

Making the transition

For most Australians working a standard full-time job – a little more than seven hours a day, Monday to Friday – moving to a four-day work week could occur in two stages.

The first stage would be to be shift to a nine-day fortnight with no change in total weekly hours. So the average working day would increase by 50 minutes (from seven hours 36 minutes to eight hours 26 minutes).

The second stage would be to shift to a four-day week with eight-hour working days (a 32-hour working week).

A lot of more detailed questions would still need to be resolved.

Should we choose to extend the weekend to three days, or stick with a five-day week – having different workers taking different rostered days off? Should schools continue to operate five days a week? How will working from home fit in? Will there be even more pressure than there is already to deal with work-related demands on notional days off?

These problems, and others, do complicate the shift to a four-day week. But they are not insurmountable.

The real question, 70 years after the arrival of the weekend, is whether we are ready to trade in some of our increased productivity for a life with more free time for family, friends and fun. Or we do we want to keep on working so we can consume more and live in bigger houses with room to store the stuff we buy to make ourselves feel better about working so much.

There’s a lot of evidence that experiences give us more happiness ^[11] than material goods. But experiences require time as well as money. A four-day week would be one way to get that time.