Can Developing Nations Join The Shorter Workweek Wave?

The 4-day workweek is an emerging trend with promising results; but so far it has only been implemented in developed nations. Can developing nations catch the wave of this trend?

Germany, the powerhouse of Europe's economy, is navigating through severe labor shortages, with 50% of its companies grappling with high-skilled labor deficits, the survey by DIHK Chamber of Commerce and Industry outlined. Faced with a workforce that seeks enhanced compensation and improved working conditions, the country is boldly experimenting with a four-day workweek to address the pressing challenges.

The new work model is expected to tackle labor shortages and improve overall economy.

In this article, we will delve at 4-day work week model and understand its feasibility in developing nations.

Why Germany is facing labor shortages?

In Germany, a quarter of population is over the age of 65. As a result, the working population of the country has declined significantly in the past three years. Ageing population also means that a majority of people need social services like pensions. This puts pressure on the system with lesser workers contributing.

The remaining people in the system face increased workload and stress to compensate for labor shortages.

There are close to two million (1.8 million) vacant jobs in Germany that remain unfulfilled. These jobs, in value could have added 98.8 billion dollars to German economy; all this is lost.
While Germany has recently made efforts to attract skilled workers from abroad, bureaucratic hurdles and integration challenges still discourage immigration. A legislation to ease immigration in the country was proposed last year and is up for debate till March 8th. In the proposal, easing the immigration process, reducing the paperwork and soothing the language barrier for foreign workers was proposed. 

The remaining workers in the system are, hence, demanding increased salaries, flexible working hours and at the center of it- demanding 4-days work week.

The four-day work week model:

In a four-days a week work model, employees have to work for four days in a week. The crucial aspect of the model is that it neither cut employee’s salaries for extra day off (known as hourly wage system), nor expects employees to work 40 hours a week in 4 days instead of five (40 hours a week model). 

In this, the working hours are reduced and the employees are paid for three-day-long weekend. 

In Germany, more than 45 companies are participating in the six-week long experiment where the success of the model would be determined if the productivity remains same or increases than the current numbers. 
The work model in Germany is implemented by consulting firm Intrapreneur in collaboration with 4 Day Week Global (4DWG), a non-profit organisation leading the initiative globally. 

How model will help with labor shortages?

Economists predict that implementing a four-day workweek could significantly enhance employee work-life balance and prove appealing to the reluctant workforce. By offering a more flexible and balanced schedule, this model addresses the concerns of those intimidated by traditional five or six-day workweeks.

10+ nations have adopted the model:

Germany is not the first country to experiment with the model. More than 10 nations, including the US, the UK, Netherlands, Sweden, and Denmark have already implemented the model, which has given remarkable results. Employee productivity has improved and overhead costs have decreased. 

In Australia, the project was implemented in 2022 across 25 different companies for six months. 97% of employees reported feeling happier and less stressed, and 91% were more satisfied with their work-life balance. 78% of companies reported maintaining the same level of productivity, and 43% even saw an increase, while the number of sick leaves decreased by 44.3% per month. In UK, these numbers dropped by whopping 65%. 

95% of the companies wished to continue with the model. 
Similar results were obtained in Japan, United States, Iceland and the United Kingdom, where both employee and employers were happy with the new work schedule.
The 4 days a week model has become a standard practice in Belgium, Denmark, UAE and France as well. 

The promising science behind the four day work model:

The four-day work model, often perceived as primarily benefiting employees, is, in fact, a mutually advantageous arrangement for both employers and employees alike. Employees get longer weekends and an additional day off for no salary deductions- this improves their work life balance and manage stress.
Similarly, delving at the perspective of employer, smaller work week proves advantageous.
In evaluating business productivity, the economic output per total hours worked is a key metric. Adopting a four-day work model can reduce operational costs such as electricity, especially significant amidst rising energy expenses post the Russian invasion of Ukraine. This condensed workweek not only enhances work-life balance but also optimizes resource allocation for businesses.
However a crucial consideration is that the scheme is not universally adoptable. For sectors requiring continuous work for seven days a week, such as healthcare and customer service, challenges exist. 

Can developing nations follow the lead?

The adoption of 4-day work week has been successful in developed nations, characterized by high GPD, better economic structure and comparatively higher standard of living.
However, when considering the feasibility of this model in developing nations like India, where the productivity per hour stands at around $9 but the average hourly income is as low as $0.5 (INR 43), unique challenges come to the forefront.

                                                                       Labor productivity per hours worked in Dollars (For India, 2000-2018)

Amid such huge disparity, Reducing working hours in developing nations with already lower average incomes and productivity could further exacerbate economic challenges. The risk of job losses, reduced work hours, and diminished income becomes more pronounced, especially in the informal sector, which employs approximately 87% of India's total workforce according to World Bank estimates. Estimation by the International Labor Organization suggests that over 80% of non-agricultural employment in India is informal.

The majority of this informal workforce, often paid on an hourly basis, may face heightened financial difficulties due to the reduction in work hours. Implementing a four-day workweek in developing nations, therefore, requires a nuanced approach that considers the unique economic landscape, income distribution, and employment structures prevalent in these regions.

Conclusion:

The four-day work week is a win-win situation for both employer and employee. While developed nations such as Australia and Denmark have shown promising results, implementing the same in developing nations such as India is complicated. 
The vast informal sector and lower average incomes would stress already ailing lower middle-class and lower-class families.
On top of this, there exists a psychological barrier. In developing nations, such as Pakistan and Bangladesh, even five week work day model is not widely accepted, so migrating to four day work week is a far-fetched dream.