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  1. The Staggers
21 February 2023

The case for a four-day working week has never been stronger

Reduced hours on full pay would relieve a labour market overheated by high rates of quitting, early retirement and ill health.

By Will Dunn

Since last June, thousands of workers in different sectors of the British economy have worked a four-day week, while retaining their full pay, in the biggest-ever trial of reduced working hours. The results of the trial – published this morning (21 February), and presented to MPs later today – are unequivocal: 92 per cent of companies have committed to continue the arrangement beyond the end of the pilot scheme, while almost a third (29.5 per cent) have already decided to make four-day working permanent.

Researchers from Cambridge University and Boston College found that while productivity was maintained and revenue rose on average at participating companies, there were very significant changes in the number of sick days taken (which were reduced by 65 per cent) and the likelihood of employees quitting (which declined by 57 per cent).

There are all sorts of human reasons to let people spend less time working, but in economic terms these two – workers quitting or being ill – are the big ones, especially in today’s tight labour market.

A high quit rate is a problem for companies at any time, because it typically costs £800-£1,500 just to find an employee in the UK (according to data collected by XpertHR from 110 companies last year), while the Chartered Institute for Professional Development (CIPD) estimates it costs £3,000 to hire a manager. Add in the cost of training a new employee, the opportunity cost of the vacant post, and the lost skills and experience of the one who has left, and losing a mid-career employee can easily cost a company £30,000, according to Oxford Economics.

But in 2021, the quit rate also began to worry economists: it was one of the big signs that inflation was heading our way. As the “Great Resignation” took hold in the US and UK, quitting reached its highest level for 20 years. By June 2022, the CIPD reported that 6.5 million British workers expected to quit in the coming year. The Bank of England’s latest monetary policy report shows that this is making inflation more persistent; wage growth has risen to 6.4 per cent across the economy, as workers seek higher wages through the labour market to compensate for the higher cost of goods. And these higher wage bills may well make goods even more expensive.

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A shorter work-week with no loss of pay is therefore a great way for a company to respond – it appears costless for most companies in terms of output, but it hands employees significant compensation in terms of time. It is exactly what the labour market needs in its current predicament: an answer to wage-growth demands that doesn’t cost a load of extra money.

The health of workers is also a key concern of economists, and again, especially at the moment. The Bank’s latest statement on inflation warns that the labour market is subject to pressure from “early retirement and long-term ill health” – two factors that would be significantly relieved if it was widely acknowledged that most people can do the same amount of work in four days as they can in five.

The health service is also the single biggest cost to the government, and the biggest cost to the NHS is long-term, non-communicable disease such as diabetes, high blood pressure, arthritis and obesity – all of which can be relieved or put off by lifestyle changes. The findings from the latest study suggest that a four-day week could be crucial to public health in an ageing society.

It may well be that the four-day week becomes the new working from home: a dwindling minority of mostly older managers will grumble, but millions of employees and their families will wonder why they ever put up with anything else.

Read more:

Why it’s time to scrap the Apprenticeship Minimum Wage

Why the economy is threatened by early retirees

Meet Britain’s new cost-of-living classes

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