4-Day Workweek Experiment: Iceland Succeeds - France Fails... What Made the Difference? [Jjinbit]

[Four-Day Workweek Era③]
How to Balance Wages, Productivity, and Working Hours... Examining Experimental Cases

[Image source=EPA Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] ‘100 : 80 : 100 = Wage : Working Hours : Productivity’

The global nonprofit organization ‘Four Day Week Global’ announced on the 7th (local time) that it will conduct a large-scale experiment on the four-day workweek in the UK, highlighting three key elements. The principle is to maintain productivity and wages at 100% as before, while reducing working hours to 80%. This principle is based on the premise that workers generally do not want their wages to decrease when working hours are reduced, and companies cannot afford to compromise on productivity.

This four-day workweek experiment is not a recent development. Over nearly 100 years, various experiments have been conducted at the national and corporate levels. Among these, the three elements mentioned by Four Day Week Global are considered essential factors to consider when introducing a four-day workweek. According to a feature article by Japan’s Nihon Keizai Shimbun last month, there are forms of the four-day workweek such as ▲reducing working hours without reducing wages ▲reducing both working hours and wages ▲maintaining working hours but reducing working days by increasing daily working hours while keeping wages the same. 'The Era of the Four-Day Workweek'

1) Reducing Working Hours but Keeping Wages the Same: Iceland and UK Marketing Agency Lux

The method of reducing working hours while maintaining wages and productivity is the most ideal form of introducing a four-day workweek. A representative case fitting this is the large-scale four-day workweek experiment conducted in Iceland from 2015 to 2019. At that time, public sector workers in Iceland reduced their working hours from 40 hours per week to 35?36 hours while maintaining the same annual salary and increasing productivity, successfully implementing the four-day workweek. According to a report released in June last year by the UK think tank Autonomy analyzing this experiment, it was conducted under the leadership of the Reykjavik City Council and the central government, targeting 2,500 employees.

Meetings were allowed only before 3 p.m., unnecessary meetings were reduced, and meetings were replaced with emails whenever possible. Time spent on coffee breaks and rest was minimized, and services were digitized. These measures proved that working hours could be reduced while maintaining wages and service efficiency. The experimental group showed lower physical and mental stress, higher job satisfaction, productivity, and work-life balance, whereas the control group showed declines. Following this experiment, most Icelandic public servants currently work between 26 and 35 hours per week, down from the previous 40 hours, according to the US political media outlet Politico.

UK-based marketing agency Lux, located in Edinburgh, also succeeded with a four-day workweek without wage reductions. They began experimenting with the four-day workweek in January 2020, at the start of the COVID-19 pandemic, and officially adopted it last January after two years of trials. During the experiment, Lux formed rotating shifts from Monday to Thursday and Tuesday to Friday to maintain client interactions, and did not disclose to employees whether the four-day workweek experiment was ongoing to assess if productivity was affected. As a result, Lux reported a 30% increase in sales and a 24% increase in productivity during the experiment. Alice Will, co-founder of Lux, told CNBC on the 20th, “It’s important to focus on outcomes, not how much time you put in.”

2) Reducing Working Hours and Wages: Japan’s Mizuho Financial Group

In Japan, a selectable four-day workweek that reduces both working hours and wages has been introduced one after another. Since December 2020, Mizuho Financial Group has allowed employees to choose a four-day workweek. This new working style, especially in the conservative financial sector in Japan, was reported as groundbreaking. Mizuho’s method reduces working hours while cutting wages by 20%, allowing those who want more flexibility to voluntarily choose this option. Employees can work three days a week and receive 60% of their wages if they wish, and can return to a five-day workweek at any time.

[Image source=Reuters Yonhap News]

Details such as how many employees at Mizuho Financial Group have chosen this option, their satisfaction, or productivity have not yet been disclosed. While this method offers flexibility for those whose livelihoods are not significantly affected by reduced wages, there are negative views because it directly impacts income. According to a survey by Mynavi conducted last December on 800 full-time Japanese employees, 78.5% responded that they did not want a form of the four-day workweek where income decreases due to fewer working days, as reported by Nihon Keizai Shimbun. Some critics argue that this method could be abused as a form of restructuring by companies to cut costs.

3) Maintaining Working Hours but Reducing Working Days by Increasing Daily Hours: Japan’s ZOZOTOWN

Another method is to maintain total working hours but reduce working days by increasing daily working hours, with wages remaining at 100%. According to Nihon Keizai Shimbun, Japan’s largest online fashion brand ZOZOTOWN adopted this method starting April last year. A staff member in their 30s working there designated Wednesday as an additional day off along with the usual Saturday and Sunday holidays. While working five days a week meant eight hours per day, choosing this option means working four days a week but ten hours per day. Wages remain unchanged. ZOZOTOWN introduced this after six months of preparation and reported that employees who chose this work style reduced their additional working hours by 63% and saw actual productivity increase.

However, this method assumes that the amount of work does not decrease despite reducing the number of working days, which has raised concerns that it could harm employee well-being. Some employees experienced physical strain due to longer daily working hours during the trial. Organizational psychologist Emma Russell, a senior lecturer at the University of Sussex, and others wrote in an article for Harvard Business School (HBS) last month, “The media promotes the four-day workweek as not reducing productivity,” but “leaders need to understand that reducing working hours requires adjusting workload.”

4) Reducing Working Hours and Keeping Wages the Same While Trying to Increase Employment Rate: France’s Failure

[Image source=Reuters Yonhap News]

Besides productivity, working hours, and wages, another factor?employment rate?has also been involved in four-day workweek experiments. France attempted to increase employment rates through the four-day workweek but failed. Contrary to companies’ goal of increasing productivity, the French government in 1998 believed the four-day workweek could help reduce the unemployment rate, which was about 10% at the time. This was based on the assumption that reduced working hours would lead companies to hire more employees.

In 1998, France reduced working hours from 39 hours per week to 35 hours and limited overtime to 130 hours annually. Initially, companies transitioning to the new weekly hours were given incentives, but from 2000, companies with 20 or more employees were legally required to comply. Carrefour, a leading French shopping mall, adjusted work and hours based on customer traffic.

However, according to the Organisation for Economic Co-operation and Development (OECD), the average weekly working hours for French workers at the time was 39.5 hours, indicating that working hours were not significantly reduced. The New York Times (NYT) analyzed France’s four-day workweek in 2014, pointing out that “many French companies found loopholes to bypass the law,” and that unemployment did not improve while part-time contracts increased.

Editor's Note[Jjinbit] is short for ‘Jeong Hyunjin’s Business Trend’ and ‘Real Business Trend,’ a corner that showcases trends in corporate management such as organizational culture and HR systems. We will deliver fresh and differentiated information and perspectives based on analyses from foreign media and major overseas institutions that have not received much attention so far.