Four-day work week: A silver bullet for New Zealand's economy post-COVID-19 or an idealist fantasy?

As New Zealand recovers from the economic carnage wreaked by COVID-19, employers are grappling with the way forward for their businesses and employees.

While some are calling for more Government intervention, there is increasing buzz a four-day work week could help rebuild our economy - not least of all from our own Prime Minister, who urged Kiwi employers to consider the scheme in a recent Facebook Live.

"I hear lots of people suggesting we should have a four-day work week… there's just so much we've learnt about COVID and that flexibility of people working from home, the productivity that can be driven out of that," Jacinda Ardern said last month.

"I'd really encourage people to think about that, if you're an employer and in a position to do so."

The four-day work week concept has been popularised by Silicon Valley tech firms like Microsoft and more recently European nation Finland, whose progressive Prime Minister Sanna Marin also wants to implement six-hour days.

Kiwi trustee services provider Perpetual Guardian made headlines in 2018 for introducing the policy, and founder Andrew Barnes says the results have been remarkable.

"Our productivity has gone up, our profits have gone up, our staff retention has improved, our stress levels have dropped," Barnes told The AM Show last year.

But despite the glowing recommendations, could it really be the way forward for New Zealand - or is it just a utopian fantasy?

We examine the evidence.

The argument for a four-day work week

A kick-starter for our struggling tourism industry

In her Facebook Live, Ardern spoke about the policy's potential impacts on New Zealand's $40 billion tourism industry. Pre-coronavirus domestic travel accounted for 60 percent of that.

Perpetual Guardian's Barnes says New Zealand could use the extra day off to upskill or travel, and it would allow more people to keep their jobs.

Barnes suggested employers could pay staff for four days' work, with the Government partly meeting the cost to workers of reduced hours, while committing to get them back to full pay within six to 12 months.

"New Zealand could definitely go to a four-day week in the aftermath of COVID-19 - and in fact, it would be a strategy to rebuild the economy and particularly the hard-hit tourism market as it pivots to a domestic focus," he said.

Weekends were once idealistic, too

It's worth noting that until less than a century ago, a two-day weekend would've seemed a radical concept to most people in New Zealand, and indeed many around the world.

The 1930s was the first time a 40-hour work week and subsequently a weekend entered Aotearoa's legislation, with the Industrial Conciliation Amendment Act and Factories Amendment Act coming into force in 1936.

The Labour government in power at the time argued that a shorter working week "increased employment opportunities in a time of economic depression", according to Te Ara.

Workers posing beside butter churns in a dairy factory in the early 1900s. Weekends were uncommon in New Zealand until the 1930s.
Workers posing beside butter churns in a dairy factory in the early 1900s. Weekends were uncommon in New Zealand until the 1930s. Photo credit: Tudor Washington Collins / Auckland Museum

But other Western countries faced significant opposition to the weekend, with one powerful Australian manufacturing magnate calling it a "dangerous experiment".

"The availability and cost of goods and services at home and abroad should be the overriding factors in any decision to increase leisure by curtailing working hours," McKay is quoted as saying in a 1948 report by The Age.

"[It's] Alice in Wonderland reasoning that a country desperately short of production and labour could give itself any relief by working less and at greater cost."

But now weekends are as natural to us as roast turkey on Christmas Day, and the prospect of getting rid of them is unimaginable - so perhaps we shouldn't be too quick to brandish the four-day week as unrealistic.

It lifts staff retention and happiness levels

In defending her government's push for a flexible working week earlier this year, Finnish Prime Minister Sanna Marin said it would provide a greater quality of life.

After opposition leaders rubbished the policy as unrealistic, she told them: "Why couldn't it be the next step? Is eight hours really the ultimate truth? I believe people deserve to spend more time with their families, loved ones, hobbies and other aspects of life, such as culture."

A Henley Business School study found increased time away from the office had overwhelmingly positive impacts on staff, with more than three out of every four workers reporting a four-day work week had improved their quality of life.

Four-day weeks have overwhelmingly showed positive effects on staff happiness and retention.
Four-day weeks have overwhelmingly showed positive effects on staff happiness and retention. Photo credit: Getty

Meanwhile, a trial of shorter hours for nurses in Sweden was found to have brought improved energy, happiness and health impacts, and research also suggests the improved work-life balance means it's easier for businesses to retain staff, as they're less likely to want to leave.

One company, UK-based consulting firm MRL Consulting Group, reported its staff retention soared to 95 percent during its six-month trial of the policy, while short-term absences fell by 40 percent.

It boosts productivity

MRL says productivity has jumped by 25 percent during its trial - and they're not alone.

Microsoft Japan's output levels increased by a whopping 40 percent when it implemented a four-day week, while Perpetual Guardian saw a double-figure lift in leadership, commitment, stimulation and empowerment.

Melbourne company Collective Campus implemented shorter working hours and found it eliminated unproductive work activities such as extended meetings and aimlessly surfing the internet.

During its trial, Perpetual Guardian reported that job performance could be maintained in one day fewer each week - although branch manager Tammy Barker said some of that comes down to a clear plan for each employee.

"The biggest concern from an employer point of view is ensuring that the full-time introduction of the policy doesn't lead to complacency, with the risk that people’s productivity will slip back," she told The Guardian.

"To guard against this happening we've spent a lot of time making sure every person in every team has their own plan as to how they're going to maintain and even improve their productivity."

Considering New Zealand has the lowest multi-factor productivity growth and the fourth-lowest labour productivity growth in the OECD, a marked improvement here wouldn't go amiss.

It'll help us reach our Zero Carbon targets

One of the noticeable impacts of the COVID-19 outbreak in New Zealand - in particular the subsequent lockdown period - was a major improvement in air quality.

NIWA reports air pollution was down by 75 percent across Auckland, Wellington, and Christchurch at alert level 4, while another report found that our carbon dioxide emissions had fallen by 41.4 percent - the second-largest drop in the world.

The reason? We weren't travelling to work.

Air pollution in Auckland, Wellington and Christchurch was down by 75 percent during the alert level 4 lockdown.
Air pollution in Auckland, Wellington and Christchurch was down by 75 percent during the alert level 4 lockdown. Photo credit: Getty

Studies back-up the theory that a four-day work week can be one of our most effective tools in the global battle to curb climate change, with significant reductions in carbon footprints following just a 10 percent reduction in work hours.

For this reason, a four-day work week could have the fringe benefit of helping New Zealand achieve its goal of net-zero emissions for all greenhouse gases by the year 2050 - an objective enshrined in the Zero Carbon Bill since last year.

The argument against a four-day work week

It simply isn't realistic for every business

With so many businesses singing the praises of four-day work weeks, it's perhaps surprising to hear a few businesses have decided not to go through with it after trials. But the truth is it doesn't work for everyone.

One of the key issues is the expense. Some industries, such as health, retail and manufacturing, require workers across a range of shifts - so fewer work days means more employees need to be hired, which some businesses simply can't afford.

"In the health sector, nurses have been involved in industrial action because they don't have enough nurses on the ward," New Zealand Council of Trade Unions secretary Sam Huggard told Stuff.

"Workplaces that are totally stretched, they are probably impossible to do this because they can't even do their normal job in five days."

For some businesses that use a shift system, such as the hospitality sector, four-day weeks aren't always realistic.
For some businesses that use a shift system, such as the hospitality sector, four-day weeks aren't always realistic. Photo credit: Getty

The aforementioned Swedish nurses - despite increased happiness and energy during the trial - never got their shorter working week because of increased costs. Researchers also found it would create staffing issues and that they were concerned co-workers would think of them as lazy.

It was a similar story for London-based science research foundation the Wellcome Trust, which trialled giving workers Fridays off with no pay but ultimately found the policy was "too operationally complex to implement".

A Guardian report on the decision said Wellcome's experience indicated companies that employ staff with a wide range of functions may struggle more than those that have clearly defined roles.

Even Ardern hinted that a four-day week might not be realistic for everyone, telling those tuned into her Facebook Live that "ultimately, it really sits between employers and employees".

The COVID-19 crisis may not be the best time for it

Of all the times for radical change, the aftermath of the COVID-19 crisis might not be the best - particularly after recent research showed New Zealand could really do with getting more done at work.

A recent OECD report showed we sit fourth-last for labour productivity growth and last for multi-factor productivity growth - a statistic that saw Prime Minister Jacinda Ardern draw sharp criticism from an Australian financial journalist last week.

In an article for Newsroom, Xero New Zealand's managing director Craig Hudson described Aotearoa's productivity levels as "a long-standing problem", and said the only hope for improving it lies in cloud-based technology, rather than a four-day week.

Australian National University economics professor Rabee Tourky was particularly irritated by Ardern's endorsement of four-day weeks.

"For heaven's sake, we need six-day work weeks to make up for lost time," he wrote on Twitter in response to her comments last month. His colleague Rohan Pitchford agreed, describing the four-day week concept as "misguided utopianism".

While it's generally accepted that productivity is boosted by a four-day week, results are mixed on whether it would result in employees getting through the same amount of work in four days than they would in five.

When we're in the process of rebuilding our economy, it's perhaps not the best time to risk putting that to the test.

Employers expect five days of work in four

Allard Dembe, Professor of Public Health at Ohio State University, says there are "hidden dangers" in four-day weeks - particularly if employees are expected to work longer hours to compensate for an extra day off.

"Working five eight-hour shifts is equivalent to working four 10-hour shifts. That's true," Prof Dembe wrote for The Conversation.

"But the implications of these schedules are different. The danger is in disregarding the health effects that can occur as a result of fatigue and stress that accumulate over a longer-than-normal working day."

A public health expert thinks longer hours across a four-day week could increase fatigue and stress.
A public health expert thinks longer hours across a four-day week could increase fatigue and stress. Photo credit: Getty

A study he carried out showed industrial accidents were significantly more common among those employees working long hours. "As the hours worked in those schedules increase, the risks grow accordingly," the study found.

Four-day weeks could also pile more stress on employees, causing fatigue and mental health issues, Prof Dembe says.

He warns they could also further reduce flexibility for families, with parents forced to work longer hours which may reduce the amount of time spent with spouses and children.

New Zealand's current laws make it complex

Even if a Kiwi organisation wants to implement a four-day week, it's not easy to draw up a contract model that fits with New Zealand's employment and holiday pay legislation.

The main issue lies in our tendency to think of work in terms of how long an employee spends in the office, rather than in terms of the amount of work an employee has produced.

Annual leave, for example, is accrued for every day an employee spends at work - a model that makes it difficult for a business to offer a four-day week.

"The legislation needs change so that where staff opt-in to the structure, the law provides protection for organisations. I could get prosecuted, if I get this wrong, for giving my staff 40 days off on top of their leave," Perpetual Guardian's Barnes told the NZ Herald.

New Zealand's employment laws need to change to allow greater flexibility for the country's businesses, Barnes says, so they aren't constrained by the current five-day week model.

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