Europeans are spending less time at work and governments would like to get them back to work. That is the thrust of the measures that German, Dutch and British ministers have been examining to persuade part-time workers to work longer hours and full-time workers to work overtime.
But the evidence suggests it will be an uphill battle, and that policymakers concerned about a shrinking workforce would do better to help people who otherwise wouldn’t want any jobs work a little.
Rising prosperity is the main reason why the working week has become shorter over time, as higher productivity and wages have allowed people to afford more free time. In Germany, for example, it has roughly halved between 1870 and 2000. Across the OECD, people work about 50 fewer hours each year on average than in 2010, at 1,752.
Average hours have fallen further in recent years because the mix of people employed has changed: more young people are studying, more mothers are working, older people are gradually retiring, and flexible jobs in the service sector are replacing roles in manufacturing with long hours. .
The latest post-pandemic drop in European working hours is more of a puzzle. The European Central Bank estimated that at the end of 2023, eurozone employees were working on average five hours less per quarter than before 2020, equivalent to the loss of 2 million full-time workers.
Has been a similar change in the UK, where average weekly hours are 20 minutes shorter than in 2019 by the end of 2022. The Office for National Statistics says this was due to a reduction in full-time hours among working-age men and It was equivalent to having 310,000 fewer people in employment.
The trend appears to be European: A similar shift has not been seen recently in the United States, which simply laid off people during the pandemic rather than putting them on furlough.
One explanation is that employers have been “hoarding” labor—keeping staff on downtime while cutting hours—because they worry they won’t be able to easily hire when demand increases. The ECB thinks this has been a factoralong with an increase in sick leave and rapid growth in public sector jobs.
But Megan Greene, policy maker at the Bank of England, said earlier this month that while there was some evidence of labor hoarding, it was also “plausible that…”. . . “Workers may simply want a better work-life balance.”
IMF researchers who examined the puzzle came to a similar conclusion. They said the post-Covid drop in working hours was in fact an extension of the long-term trend seen over the past 20 years, reflecting workers’ preferences, with young people and parents of young children driving the decline. . The biggest change came in countries where incomes were catching up with those of their wealthier neighbors.
Some economists, however, believe that the experience of lockdowns has made people more willing to trade their salaries for a less pressured lifestyle and more able to leave jobs with antisocial hours.
“Many people began to pay more attention to their health,” said one Frankfurt-based economist, noting that Germany, with one of the steepest declines in working hours, suffered high rates of depression and other mental health conditions, as well as of the United Kingdom.
Spain has traditionally been at the other extreme. It has some of the longest working hours in Europe, combined with a long lunch break that means many employees cannot leave until late at night, with patterns of family life, leisure and sleep. all suffering as a result.
But even here habits are changing. Ignacio de la Torre, chief economist at Madrid-based investment bank Arcano Partners, believes Spanish bars and restaurants have struggled to fill vacancies since the pandemic because former waiters have started training for better jobs.
In many countries, unions have made reducing hours a focus of collective bargaining, and some employers are experimenting with offering four-day weeks – or more flexible working patterns – as a way to attract staff.
Changing habits is a challenge for European policy makers. Since productivity growth has been weak, they fear that reducing hours will exacerbate labor shortages, fuel inflationary pressures, slow growth and make it harder to finance welfare systems.
Unless productivity growth improves, de la Torre argues, the only way to boost economic growth is to add more people to the workforce, embrace immigration, or work longer. It is not realistic to earn the same by working less: the result would be “a lower salary at the end of the month.”
But Anna Ginès i Fabrellas, director of the Institute of Labor Studies at Esade Law School, cites evidence that young people are willing to accept this commitment, valuing free time “when evaluating the quality of a job.”
Some policymakers think the goal should be to reduce working hours and achieve greater well-being. The Minister of Labor of Spain, Yolanda Díaz, provoked scandal earlier this year suggesting that restaurants should no longer open until the early hours, and the ruling coalition has promised gradual cuts to the maximum legal working week.
IMF researchers presented a more pragmatic argument.
They said governments can and should do more to help people who want to work longer hours, including supporting retraining, job-seeking and childcare, as well as promoting flexible working and removing incentives. perverse tax and benefit systems.
This will have only a small effect, the IMF estimates. Some policies will simply “reorganize schedules” between mothers and fathers. But in general, most people will want to work a little less if their standard of living improves. That means there is a limit to what authorities can do.
A more realistic goal, the IMF believes, is to increase the total number of hours worked across the economy, particularly through better parental leave policies that could attract more people to work in the first place. Recent trends in the EU are promising: labor force participation has increased since 2020.
This seems like the best approach. If employers offer better part-time and flexible roles, people who would otherwise remain completely out of the workforce could at least work a little and be happier for it. That would be more productive for governments than going against the grain.