1. Business
January 12, 2021

How a four-day week could help companies navigate the pandemic

By GlobalData Thematic Research

Support for a four-day working week has never been stronger, and the idea could become part of the coronavirus legacy. The approach is seen as particularly beneficial to a healthy work-life balance, and it is increasingly appealing to businesses that are desperate to cut costs due to the pandemic. Discussion of the four-day week will be an integral part of the debate around how to reshape the way we work, as highlighted in GlobalData’s Future of Work report.

Better work-life balance with gain in productivity

Arguments in favor of a four-day week stress that it has a range of benefits for employees, giving them more leisure time without paying them any less. Reducing work hours allows people to focus their attention more effectively and improve the quality and creativity of their work. In 2018 Perpetual Guardian, a New Zealand trust management company, announced a 20% increase in employee productivity and reduced staff stress levels after a trial of paying people their regular salary for working four days.

In 2020, amid the pandemic, New Zealand’s prime minister Jacinda Ardern encouraged all businesses that could do so to adopt four-day week policies as a way to boost a tourism sector badly hit by the crisis. In the same year, the consumer goods company Unilever began a trial of a four-day working week for all its New Zealand staff, due to run for 12 months until December 2021. The initiative follows a similar pilot by Microsoft in its Japanese operations and Toyota’s adoption of a four-day week in several of its factories.

A strategy to tackle unemployment in times of Covid-19

The four-day week is also seen by some experts as a remedy to prevent a steep rise in unemployment and a way to rethink how businesses can deploy their resources and cut costs in times of crisis. In this case, the solution is that the government steps in to offer a shorter working time subsidy scheme (SWTSS) to companies implementing the four-day week. In its 2020 report, progressive think tank Autonomy advocated introducing the SWTSS to offer support to those sectors hit hardest by the crisis in the short-term and prevent layoffs. It would also help companies in these industries transition to more desirable working patterns in the longer-term.

As an example, Target Publishing cut staff pay after the first lockdown last year and at the same time introduced a four-day week as a form of compensation to its employees. In July 2020, when the situation improved, the company reinstated all its staff’s pay and retained the four-day week.

Some organizations are still skeptical of the four-day week

There is resistance to such a radical change to our working lives, particularly from those organizations that need to provide customer service beyond standard office hours and for whom a reduction in employee availability would be hugely impactful. Another challenge is the feasibility of compressing workloads to align with a shorter working week (although advocates of the four-day week argue that workers’ overall productivity can suffer if they work long hours). A working paper from the Henley Business School states that 64% of UK employers that are already offering a four-day week say that productivity has improved.

The SWTSS scheme proposed by Autonomy could offer a chance to assess whether the four-day week model could work in the UK and other countries. It remains to be seen whether the UK government would be willing to pay for such a scheme. Nor can this be viewed as a solution to all the economic issues caused by the pandemic. Other measures will be needed if economies are to recover quickly. However, the pandemic has given companies an opportunity to experiment with new ways of working. This could allow the four-day week to move from theory to reality.