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Reducing working hours in Iceland: Lessons on workload and flexibility

Iceland

Iceland has recently been on the news because between 2014 and 2019 it trialled a move from a 40-hour to a 35- or 36-hour working week among over 2,500 workers in the public sector, which represented more than 1% of Iceland’s entire working population.

Like other Nordic countries, Iceland provides a generous social safety network for its citizens. However, this country significantly differed from others like Sweden, Norway, Denmark and Finland, as Icelandic citizens were faced with substantially longer working hours. OECD data shows Iceland was next to work-intensive countries like Chile, Mexico and Japan regarding work-life balance.

According to the recent Autonomy Report, pressures from Icelandic trade unions and civil society led to decisions to trial a shorter working week in the public sector, including four to five fewer hours per week, while keeping the same salary. The first trial was implemented in the Reikjavík City Council and the second in the Icelandic Government.

The results of these trials were extremely positive. During the trials, both qualitative and quantitative data were collected and overall, the results show that the reductions in working hours maintained or increased productivity and service provision, and improved workers’ wellbeing and work-life balance.

Reduced working hours = a four-day working week?

A lot of the recent news claims that this was a trial of the four-day working week. However, the report and the academic articles derived from the trials only describe a reduction in working hours: this means that individuals did not necessarily compress their 35/36 weekly working hours into four days – they could still be working five days a week, just fewer hours. In fact, the UK currently has a lower average number of working hours per week: 34.5.

While reduced working hours in the Icelandic public sector may not mean a four-day week, their results are indeed consistent with what we found in a large-scale survey conducted at Henley Business School in 2019. Our findings from the research, Four Better or Four Worse?, also suggest that employees who work for four days a week reported reduced stress, improved work-life balance, became more productive and spend more time developing their skills.

We additionally found that businesses implementing a four-day working week also benefit by attracting more talent and performing better financially. In particular, we found that UK businesses implementing the four-day working week have reached savings of up to £92 billion per year.

Lessons on workload and flexibility: Moving away from a blanket approach

The findings from the trials in the Icelandic public sector are extremely relevant as they contribute to the growing body of research demonstrating that reduced working hours have positive consequences both for employees and for organisations. They contradict the idea that to maintain the same output, workers will simply end up making up their ‘lost hours’ through formal or informal overtime. The Autonomy report details how workers remained or became more effective on a more limited work time: they reduced the times of meetings and re-evaluated previous work routines to decide on how to streamline processes.

Nevertheless, it is important not to claim that reduced working hours mean moving towards a four-day working week. While reducing working hours generally leads to favourable outcomes, our research demonstrated that a four-day working week might not be the best option for all roles and businesses – for example those which need to be available to their customers.

Other forms of flexibility, such as the possibility to do hybrid work (partly from home and partly from the office) or to flex between part-time and full-time are gaining increased popularity, especially post-pandemic. Improving work-life balance is always a good thing, but taking a blanket approach on a specific flexibility measure may lead to negative consequences. Businesses and employees should make decisions based on business and individual needs.

Dr Rita Fontinha

Associate Professor of International Business and Strategy
Published 8 July 2021
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