Why the four-day week may never add up

Workers hoping for an end to the five-day slog should not hold their breath no matter what campaigners may say.

“People just don’t call in sick anymore,” says Rachel Garrett, managing director of Suffolk based metal injection molding company CMG Technologies.

CMG has been “manically busy” in the past 18 months, making ventilator parts as well as 40,000 scalpel handles each week for the NHS.

But since 2015, when Garrett took the decision to lop seven hours off the working week, its 25 staff have worked just four days without any reduction in pay.

Staff able to cut travel and childcare costs are more motivated, but the bottom line is also booming. CMG, which also makes Aston Martin’s silver key fobs, has seen profits soar well ahead of sales.

“We’re reducing scrap rates, we’re reducing re-works and things like that. It’s forced everybody to be that much more efficient. We honestly haven’t looked back,” Garrett says.

CMG’s experience comes as countries across Europe experiment with fewer hours and a four-day week.

A trial in Iceland cutting some public sector work from 40 to 35 hours was branded an “overwhelming success” by researchers, while in Spain the Government is using €50 million ($85 million) from the European Union’s bailout pot to fund a three-year trial involving some 200 companies and 6,000 employees.

At 36.5 hours, the UK puts in one of the longest working weeks in Europe, ahead of France, Spain and Italy – and more than two hours more than Germany’s 34.2. Productivity meanwhile lags behind our international rivals.

Little wonder then that one in five British companies were said to be considering the option of shorter weeks in a recent survey as a Covid-19 shakes up established working patterns.

But economist Robert Skidelsky’s review for the Labour Party in 2019 concluded that a “one-size-fits-all approach will inevitably lead to problems in some sectors”. Other experts doubt whether Britain could actually afford a broader experiment with the model demanded by campaigners – a 32-hour four-day week without pay cuts for staff – and warn the move could actually entrench divides in the workforce.

Ireland’s public spending minister Michael McGrath met calls for such an experiment with a warning in June that the €21 billion ($35.7 billion) wage bill could rise by “at least a fifth”. It would also add “a high degree of complexity” to the job of providing, in some cases, seven days a week services for the public while paying workers for four days.

Translated to the UK’s own public sector pay bill of almost £220 billion ($433 billion) last year, that kind of rise would leave ministers potentially looking for more than £40 billion ($78 billion) extra in wage bills at a time when Chancellor Rishi Sunak is in the mood for spending restraint.

However, Ben Zaranko of the Institute for Fiscal Studies says the overall fiscal impact is difficult to judge due to potential factors such as health improvements and lower demand for state-funded childcare: “There are so many moving parts it would be difficult to assess with any certainty.”

Across the private sector, Tony Wilson, director of the Institute for Employment Studies, argues that the productivity gains are unlikely to be enough to allow companies to grant an extra day’s pay without the hours.

“If it were this easy, I think more organisations would be doing it or would have tried it. We choose to take productivity gains largely through higher pay, rather than fewer hours,” he says.

While somebody on a four-day week is likely to produce more than a five-day worker does in four, closing the gap completely is unlikely “without radically changing how workplaces work”. That might be through investing in labour saving technology or better management. “It isn’t something that happens by flicking a switch,” Wilson adds.

Employer groups are not sold on the idea either. On whether firms can afford to foot the bill, Roger Barker, head of policy at the Institute of Directors, says the “simple answer is no” as balance sheets have been strained by the crisis.

He says: “Businesses should do what’s right for them depending on their unique circumstances. But in many organisations, it’s quite difficult because many types of jobs require the person to be present. In many service industries, you actually need to be there to provide the service. We’ve got a tough challenge now to come out of this pandemic, so I don’t feel that now’s the right time to be thinking about that, particularly when the workforce is being offered unprecedented opportunity in terms of greater flexibility anyway.”

Experiments can also have unforeseen consequences. In France, the switch to a 35-hour week in 2000 put increasing strain on workers at the lower end of the pay spectrum after many employers compressed hours. A Canadian academic, Anders Hayden, said the worst affected workers were those whose schedules were imposed from above, more likely to be manual and unskilled workers. “There are legitimate concerns over the accentuation of inequalities with regard to working conditions,” he wrote.

Wilson adds that the French example is “quite a salutary lesson about how these things can have unintended consequences” as companies simply ratchet up the pressure on workers to do more in the time available.

He added: “If the Government did mandate 32 hours a week, for example, most firms would just pass that on through lower pay. It would not be practically possible to have lower hours and the same pay. The consequence would be that people would be worse off because employers would just pass it on through lower pay.”

Even more troublingly for a Government notionally committed to levelling up, a report from the Social Market Foundation found that those most likely to benefit from fewer hours were “higher earners, senior professionals and male”, conferring a “degree of elitism” to the four day week.

Researcher Jake Shepherd said in the report: “If large parts of the working population see no benefit from the four-day week, they may turn against the principle.”

Garratt says more and more companies are getting in touch with her to pick her brains about following CMG’s example: “I might be naive in saying it, but I don’t see the problem in [the four-day week] working across other industries.”

But the chances of any widespread switch in the UK appear remote. While Scottish first minister Nicola Sturgeon announced plans for a small £10m fund for pilot schemes north of the border earlier this year, at Westminster there are “no plans” to explore trials.

Despite the urging of campaigners, employees hoping for an end to the five-day slog should not hold their breath.

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