Europeans are spending less time at work, and governments are keen to get them back to work. That is the gist of the measures that German, Dutch and British ministers have explored to convince part-timers to work more hours, and full-timers to embrace overtime.
But the evidence suggests it will be an uphill battle – and that authorities concerned about a shrinking workforce would be better off allowing people who might otherwise not want a job at all to get some work done.
Rising prosperity is the main reason the working week has become shorter over time, as higher productivity and wages have meant people can afford more leisure time. In Germany, for example, this roughly halved between 1870 and 2000. Across the OECD, people are working on average about 50 hours less per year than in 2010, namely 1,752 hours.
Average working hours have continued to fall in recent years as the mix of working people has changed: more young people are studying, more mothers are working, older people are gradually retiring and flexible service sector jobs are replacing roles in the long-hours manufacturing industry.
The latest post-pandemic decline in European working hours is more of a puzzle. The European Central Bank estimated that eurozone workers were working an average of five fewer hours per quarter at the end of 2023 than before 2020 – equivalent to the loss of 2 million full-time workers.
A similar shift has occurred in Britain, where average weekly hours will be 20 minutes shorter at the end of 2022 than in 2019. The Office for National Statistics says this was driven by lower full-time hours among men in the age group and that this equivalent, up to 310,000 fewer people were employed.
The trend appears to be a European one – no such recent change has been seen in the US, which has simply laid off people during the pandemic rather than putting them on furlough.
One explanation is that employers have been ‘hoarding’ workers, keeping staff employed during slack periods while cutting back hours, because they fear they will not be able to easily hire people when demand picks up. The ECB believes this has been a factor, along with a rise in absenteeism and rapid growth in public sector jobs.
But Megan Greene, a policymaker at the BoE, said earlier this month that while there was some evidence of labor hoarding, it was also “plausible that . . . employees may simply want a better work-life balance.”
Researchers at the IMF who examined the puzzle came to a similar conclusion. They said the post-Covid decline in working hours was in fact an extension of the long-term trend over the past two decades, reflecting worker preferences – with young people and fathers of young children driving the decline. The biggest change occurred in countries where incomes were catching up with their wealthier neighbors.
However, some economists believe that the experience of lockdowns has made people more willing to trade money for a less pressured lifestyle, and more able to walk away from jobs with anti-social hours.
“Many people started to pay more attention to their health,” said a Frankfurt-based economist, noting that Germany, with one of the sharpest declines in working hours, suffered high rates of depression and other mental illnesses, along with UK.
Spain has traditionally been at the other extreme. It has some of the longest working hours in Europe – combined with a long lunch break, meaning many workers can’t clock out until late in the evening, meaning family life, leisure time and sleep patterns suffer.
But even here, habits are changing. Ignacio de la Torre, chief economist at Madrid-based investment bank Arcano Partners, thinks Spanish bars and restaurants have struggled to fill vacancies since the pandemic as former waiters have started training for better jobs.
In many countries, unions have made shorter working hours a focus of collective bargaining, and some employers are experimenting with offering four-day work weeks – or more flexible working patterns – as a way to attract workers.
The change in habits is a challenge for European policymakers. Because productivity growth has been weak, they fear that shorter working hours will worsen labor shortages, fuel inflationary pressures, hold back growth and make it harder to fund social services.
Unless productivity growth improves, De la Torre argues, the only way to boost economic growth is to attract more people to the labor market, embrace immigration or work longer. It is unrealistic to earn the same while working less: the result would be “a lower salary at the end of the month”.
But Anna Ginès i Fabrellas, director of the Labor Studies Institute at Esade Law School, cites evidence that young people are willing to accept this trade-off and value free time “when assessing the quality of a job.”
Some policymakers believe that shorter working hours and greater well-being should be the goal. Spain’s Labor Minister Yolanda Díaz caused a stir earlier this year by suggesting that restaurants should no longer open until the early hours, and the coalition government has promised gradual cuts to the legal maximum working week.
The IMF researchers made a more pragmatic argument.
Governments can and should do more to help people who want to work more hours, they say, including by supporting retraining, job searches and childcare, promoting flexible working and removing perverse incentives in tax and benefit systems.
This will only have a minor effect, the IMF estimates. Some policies will simply “rearrange” the hours between mothers and fathers. But in general, most people will be willing to work a little less, provided their standard of living increases. This means that there is a limit to what policymakers can do.
A more realistic goal, the IMF believes, is to increase the total number of hours worked across the economy, not least through better parental leave policies that could put more people into work in the first place. Recent trends in the EU are promising: labor participation has increased since 2020.
This feels like the better approach. If employers offer better part-time and flexible jobs, people who might otherwise remain out of the workforce altogether could at least work a little – and be happier for it. That would be more productive for governments than pushing against the tide.
delphine.strauss@ft.com
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