Four day week and higher minimum wage could solve UK’s productivity crisis
The poorest 50% of households could see 13% boost in income by 2030 with 4-day week and higher minimum wage.
It is part of a radical plan to solve the UK’s ongoing productivity crisis devised by thinktank the New Economics Foundation who are in favour of gradually reducing time spent working while raising minimum wages faster than planned.
Britain is now in its tenth year of feeble labour productivity growth and politicians have so far failed to tackle the crisis.
Their research shows that moving to a 4-day week by 2030 while lifting the national living wage to around £19 per hour rather than an expected level of £12 per hour would result in a rise of disposable income for the poorest 50% of households by 13% on average.
For the poorest 10% of families, incomes rise by an average of 26%, while incomes for the richest 10% would be 8% lower.
Last year Labour ’s shadow chancellor John McDonnell hinted that the party could support a four-day week as a way to ensuring that workers benefit from the fourth industrial revolution and automation.
He said at the time: “We work the longest hours in Europe and yet we are less productive. The Germans and French produce in four days what we produce in five and yet we work the longest hours.”
At last year's TUC conference union bosses backed the policy.
Frances O’Grady, the general secretary of the Trades Union Congress (TUC), told the organisation's 150th annual gathering: “In the 19th century, unions campaigned for an eight-hour day. In the 20th century, we won the right to a two-day weekend and paid holidays.
“So, for the 21st century, let’s lift our ambition again. I believe that in this century we can win a four-day working week, with decent pay for everyone. It’s time to share the wealth from new technology, not allow those at the top to grab it for themselves.”
Despite a far larger economy overall today compared with before the financial crisis, workers still earn £15 less per week on average than their equivalents did in 2007.
While the last decade has seen the worst real earnings growth for more than two centuries in part because productivity growth has collapsed by two thirds.
Alfie Stirling, Head of Economics at the New Economics Foundation, said: “The problems are deep and structural, ranging from high levels of inequality to an ageing population. The policy response needs to be equally transformative.
“Raising demand by growing the incomes of the poorest families, while giving people more time off to spend it, should be part of the mix of options that policy makers should be urgently looking at.”
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