The study utilises profitability data on UK businesses for the first time to see whether firms could afford to switch to a four-day (32 hour) working week.

Using profitability statistics on over 50,000 leading UK firms, Autonomy simulated best and worst case scenarios regarding profit rates under a sudden imposition of a four-day week and found that:

• Under the best-case scenario, a reduction in hours would be entirely offset by increases in productivity and price increases.

• Under the worst-case scenario, a four-day week with no loss of pay would be affordable for most firms once the initial phase of the Covid-19 crisis has passed.

• Under the worst-case scenario, some firms in high-labour cost industries could experience cash flow problems but only if a four day week was implemented too quickly.

The report recommends that the public sector should lead the way in adopting shorter working hours and trade unions should be given a stronger voice to negotiate working time reductions in their specific sectors.

Authors:

Rob Calvert Jump

Will Stronge

Will Stronge, Director of Research at Autonomy, said:

“For the large majority of firms, reducing working hours is an entirely realistic goal for the near future. By providing a hypothetical ‘stress test’, we can dispel any myths about the affordability of a four-day working week. 

“Any policy push will have to be carefully designed, and different strategies would need to be deployed for different industries. However, what is remarkable is that if it happened overnight, with no planning, most firms would still remain profitable.

“The four-day week is picking up momentum across the world post Covid-19 and we’re calling on the government to begin investigating the best options for rolling it out.”

Peter Dowd, Labour MP for Bootle and former Shadow Chief Secretary to the Treasury, said:

“If the Government is serious about levelling up this country then they should consider the four-day week as it represents one of the best opportunities for sharing work more equally across the economy.

“I’m in favour of the four day week being introduced as all the evidence shows that it would boost wellbeing, improve productivity and give British workers a much better work-life balance.”

The report was assisted by the support of an ESRC Knowledge Exchange Fellowship with the University of
Exeter.

This research was supported by the Rosa Luxemburg Foundation.