[Jjinbit] The Work Revolution Arrives After 100 Years: '4-Day Workweek' [Office Shift]⑦

Active Discussions on Work Hour Reduction for Work-Life Balance and Workforce
'Experimental Field' Established... Experiments Considering Wages and Productivity Underway

Editor's Note[Jjinbit] is a shortened form of 'Jung Hyunjin's Business Trend' and 'Real Business Trend,' a segment that showcases trends in changes in work. The segment within Jjinbit called 'Office Shift' carefully examines changes in offices triggered by the COVID-19 pandemic and will serve as a foundation to explore answers to work styles through experiments we have conducted together. It will be delivered to you every Saturday and Sunday morning. After 40 installments, it will also be available as a book.

"I wish the weekend had one more day." This is something often heard when meeting friends who work in offices on Sunday afternoons. They say that if a four-day workweek were implemented, the dreaded 'Monday blues' (the fatigue felt every Monday when the week starts) would disappear, their eyes sparkling with hope. Soon, they let go of their inflated expectations but smile as if just dreaming of a four-day workweek made them happy. The premise of introducing a four-day workweek is that the salary remains the same as now. When asked how they would react if the company said they would reduce working hours but also cut pay, their expression darkens and they hesitate, saying, "That’s a bit..." and trailing off.

The five-day workweek has been in place for nearly 100 years. It spread worldwide after Henry Ford, the 'King of Cars' and founder of Ford Motor Company, announced the five-day workweek with 8 hours a day, 40 hours a week, in 1926. The COVID-19 pandemic ignited discussions about the four-day workweek. Until then, experiments with the four-day workweek had been conducted several times worldwide, but it was generally perceived as an unusual measure rarely seen around us.

After more than three years of the pandemic, the four-day workweek is no longer a special measure but a viable option to consider applying in reality. Although only a few companies have adopted it and it is not yet a widespread system, a platform for experiments has been established where factors to consider and various application methods are discussed to implement it in practice.

◆ Four-Day Workweek: Guaranteeing Work-Life Balance and Securing Talent?

The values of work-life balance (Work and Life Balance, 'Wolabal') and well-being were the top concerns for office workers during the COVID-19 period. As remote work spread suddenly without preparation and adjusting work became difficult, the boundary between work and life collapsed. The number of employees complaining of burnout increased. Criticism that long working hours are inefficient and actually reduce productivity spread. This was why voices calling for reduced working hours grew among office workers. The four-day workweek surged as a result.

Based on experiments conducted before COVID-19, it was difficult to predict the success of the four-day workweek. France first enacted a law in 2000 to reduce weekly working hours to 35, but side effects such as an increase in part-time contracts followed. On the other hand, experiments in Iceland from 2015 to 2019, mainly among public sector workers, reduced working hours from 40 to 35-36 hours per week while maintaining annual salaries, and were evaluated as successful by increasing productivity and improving employees' work-life balance. Icelandic civil servants are reportedly still maintaining this system.

Although the endemic phase (transition of an infectious disease to an endemic) has arrived, discussions about the four-day workweek are expected to continue. Interest in work-life balance and well-being is growing, and in the fiercely competitive post-COVID-19 labor market, this work style is regarded as a kind of 'welfare' to attract talent. Juliet Schor, an economist and sociologist at Boston College who led the four-day workweek experiment in the UK, said, "At first, the four-day workweek was an issue for employers about pandemic burnout," adding, "Now it has become a matter of retaining and recruiting employees."

Especially, on-site workers cannot work remotely, which is considered another welfare and benefit. Therefore, companies are emerging one after another to attract talent by reducing working hours. Brian Kropp, head of HR research at market research firm Gartner, said in an interview with the US business magazine Fast Company in May last year, "The war for talent is very fierce. Companies are tired of raising wages by 20% every six months," and explained, "Instead, reconsidering the 40-hour workweek and saying, 'We won’t pay more, but we will reduce working hours,' becomes one way to secure talent."

◆ Experiments 'One After Another' Worldwide... Speeding Up National and Local Government Legislation

During the COVID-19 pandemic, various forms of four-day workweek experiments began worldwide.

According to the Washington Post (WP) and others on the 28th of last month (local time), the Maryland State Legislature in the southern United States is reviewing a bill that provides tax incentives to companies introducing the four-day workweek this year. The core is to grant an annual tax credit of $750,000 (about 980 million KRW) every year to companies that reduce weekly working hours from the existing 40 to 32 hours. Representative Shelly Hettleman, who proposed the bill, said, "Seeing the Great Resignation (the mass quitting phenomenon in 2021), I judged that workers are thinking about working differently than before."

Maryland is not the first US state to consider introducing the four-day workweek. In California, home to Silicon Valley and regarded as the center of global IT companies, a bill was proposed last April to mandate a 32-hour, four-day workweek for workplaces with more than 500 employees. Previously, the 40-hour, five-day workweek was applied, but efforts were made to reduce working hours. If passed, about 2,600 California companies and one-fifth of the state's workers would be affected, but the bill has not yet passed the state legislature.

European countries already enacted laws related to the four-day workweek during the COVID-19 period. According to Euronews and others, Belgium proposed a bill last February allowing workers to choose between four or five working days per week, which has been in effect since November of the same year. However, if the number of working days per week is reduced from five to four, daily working hours extend from 8 to 9 hours and 30 minutes. The total working hours are hardly reduced, but the number of working days is reduced to increase holidays.

In Spain, the progressive party M?s Pa?s proposed an experiment to reduce working hours mainly in small and medium-sized enterprises starting last December. The Spanish government created a subsidy fund of 10 million euros (about 1.38 billion KRW) to provide subsidies to participating companies while maintaining wages but significantly reducing working hours. Companies receiving subsidies must devise and submit plans to increase productivity to cover excess labor costs.

Japan, known for its conservative work environment, is also promoting the 'Selective Four-Day Workweek' led by the ruling Liberal Democratic Party since 2021. It allows employees who wish to work four days a week but permits a 10-20% salary reduction. In this process, major Japanese companies such as Panasonic and Hitachi have actively participated in experiments by adopting the four-day workweek.

◆ The Relationship Between Livelihood-Dependent Wages and the Four-Day Workweek

At first glance, the four-day workweek seems like a 'dream work environment,' but to implement it in reality, detailed aspects must be comprehensively reviewed. Looking at the application methods of the four-day workweek in various countries mentioned earlier, the key elements are working hours and wages. Reducing working hours while maintaining the same wage is the most ideal condition for workers. Since wages are directly linked to workers' livelihoods, reducing wages along with working hours is a condition that workers find hard to welcome.

The nonprofit organization Four Day Week Global, which leads private sector four-day workweek experiments in the UK and the US, set the basic condition of reducing working hours by 80% while maintaining 100% wages for this reason. The four-day workweek being introduced in Maryland, California, and Spain maintains wages while reducing working hours. According to foreign media, Intesa Sanpaolo, Italy's largest bank, has allowed employees to choose a four-day workweek while maintaining the same salary since January this year.

On the other hand, the four-day workweek mainly discussed in Belgium and Japan reduces wages if the total working hours and working days are reduced, or extends daily working hours if the existing wage is maintained while reducing working days. This is similar to the recent trend in South Korea's petrochemical and manufacturing industries shifting from the existing four-shift three-team system to a four-shift two-team system, reducing working days but increasing daily working hours. Spanish telecom company Telef?nica, contrary to the government's experiment, introduced the four-day workweek while reducing wages by 12%.

Low-skilled, low-wage workers who supplement their income with overtime pay worry that their real wages may decrease if the four-day workweek is introduced due to low base pay.

◆ Four-Day Workweek: Is Productivity Okay?

From the perspective of companies and management, the biggest concern in introducing the four-day workweek is productivity. It is important whether productivity and efficiency can be improved by reducing the weekly working days from five to four, raising corporate performance, or reducing costs. Since management's will directly leads to the introduction of new work systems, confidence that the four-day workweek guarantees productivity is expected to lead to the spread of this system in the future.

According to a survey conducted by the employment platform Saramin in December 2021 targeting 279 companies, both companies positive and negative about the four-day workweek focused on productivity. Among companies that answered 'negative' about the four-day workweek, 47.2% cited 'concerns about decreased productivity' as the top reason. Among companies with a positive stance, 6 out of 10 said that 'ensuring sufficient rest will increase employees' productivity' with the four-day workweek.

However, management still does not have high expectations that the four-day workweek will improve productivity. In the Saramin survey, about half of the responding companies said they do not expect the four-day workweek to be actually implemented.

In a survey conducted by the UK's official Chartered Institute of Personnel and Development (CIPD) in June-July last year targeting 2,000 decision-makers on work environments in domestic companies, 55% of respondents said, "Reducing working hours without changing wages is a good idea, but it will not happen in our organization," showing similar results. The response rate that productivity would improve with the four-day workweek was 39%, higher than the 30% who said it would not, but 66% of all respondents said that to introduce the four-day workweek without wage reduction, efficiency must first be improved.