Ideas: Is the four-day week the solution to rising unemployment?

Rising unemployment is one of the key concerns for the UK economy moving forward and one that could hold back the recovery from COVID-19 just as it is getting under way. Here, we discuss whether a four-day work week could be part of the solution and look at real-world examples providing insights into how such a scheme could work in practice

Most arguments for the four-day week focus on employee wellbeing and work-life balance. But, it’s also possible that a shorter working week might offer an effective solution to rising levels of unemployment.

Since the COVID-19 pandemic, the UK has experienced a steep rise in the number of people who are out of work.

The government’s spending watchdog, the Office for Budget Responsibility, predicts that 2.2 million people will be unemployed by the end of 2021, or 6.5 per cent. That’s the highest rate since 2011, when the economy was still feeling the effects of the 2008 financial crisis.

If full-time workers want to work less, and many people cannot get any work at all, then shortening working hours to create more jobs and prevent redundancies seems like a sensible solution.

Research by think tank Autonomy suggested that moving public sector workers to a 32-hour week with no loss of pay could create between 300,000 and 500,000 new full-time equivalent jobs in the sector.

However, whether this would a plausible solution for all types of businesses across all industries is hard to say. A four-day week might be feasible for those in office roles, but it might not work so well for shift workers or customer service and retail workers, for instance.

We’ll probably only get a better idea of how a four-day week plays out for different industries if and when more employers decide to take the risk and make the switch.

Perhaps the most high-profile company to have made the switch is Unilever, which moved staff at it’s New Zealand base to a four-day week without making any pay reductions.

The international consumer goods company — that produces Dove soap, Marmite, and Magnum ice creams — claimed the move was motivated by a desire to modernise their company culture.

Nick Bangs, managing director of Unilever New Zealand, explained that the brand wanted to focus on staff over profits: “Essentially, this is about a holistic understanding of how work and life fit together, and improving mental and physical wellbeing.”

Unilever’s trial will run until December 2021, and the firm is working with Sydney’s University of Technology (UTS) Business School researchers to keep track of performance. If the scheme is a success, the global brand’s 150,000 employees around the world could be next in line to benefit.

Changes are happening elsewhere, too. In mid-March, Spain became the first country to launch a state-sponsored trial of the four-day working week.

Although the details of the proposed €50 million plan are yet to be confirmed, the left-wing political party Más País have suggested that up to 200 companies could receive funding to trial a 32-hour working week for up to three years — a move that would mean major changes for anywhere from 3000–6000 workers.

The Más País party is hopeful that the programme will show other businesses across Spain that the four-day week can be cost-effective as well as beneficial for employees.

It just goes to show the level of confidence that many politicians and business leaders have in the idea around the world.