Making the four-day week work for Britain

[May 16, 2023]  By Sarah Young and David Milliken

HOVE, England (Reuters) - Two workers glide between a computer screen and a stainless steel vat making face cream, a scientist in a white coat mixes a formula and a colleague sticks labels on bottles.

Apart from the whir of machines, there is silence: this is "deep work time" at British skincare maker Five Squirrels when staff strive to boost productivity so they can take Fridays off and still get a full week's pay.

Owner Gary Conroy said his 15 workers had smashed through their targets since switching to the shorter week last June and introducing four-hour periods each day when they ignore emails, don't answer phone calls and turn off instant messaging.

What may seem an eccentric experiment is one of a number of trials of four-day working that has drawn interest from economists and businesses keen to find a solution to a slowdown in productivity growth in Britain and other Western economies.

Productivity - or economic output per hour worked - grew at an average of just over 2% a year in Britain from the 1970s until the run-up to the financial crisis, underpinning a steady rise in living standards.

But between 2010 and 2019, it averaged just 0.75% and the Bank of England forecasts it will remain weak over the next few years, partly due to more red tape since Brexit.

In that context, cramming the same output into a four-day week represents the equivalent of a decade's worth of productivity gains before the mid 2000s slowdown - and in the case of Five Squirrels, there's a happier workforce too.

"Everyone was pounding through their work from Monday to Thursday to make sure that Friday, it was definitely going to happen," said production executive Lilly Ellis, 21. "It was really easy to keep that energy up as well. It's not really dropped off."

INVESTMENT HELPS

The company based in Hove on Britain's south coast was one of 61 firms - most with 25 or fewer employees - to take part in the world's biggest four-day week trial last year. Pleased with the outcome, 56 have stuck with the policy.

The vast majority said overall productivity and performance were maintained, though for some firms the need to work longer hours on the four working days meant they failed to cut a full eight hours from the week.

The organizations behind the trial, the 4 Day Week Campaign and research group Autonomy, told Reuters they would be running a new trial from June 12 and had received hundreds of enquiries.

Part of Britain's long-term productivity problem stems from low investment, which was the weakest in the Group of Seven rich nations in 2021, according to World Bank data.

The experience of some companies in the first trial suggests that moving to a four-day week might help, if it prompts firms to spend more on equipment and training.

Stellar Asset Management's chief operating officer Daryl Hine said the financial services firm introduced new technology to streamline and automate processes when it moved to four days.

While that might have led to fears about job losses in the past, Hine said "everybody could see the tangible benefits". The productivity gains at Five Squirrels were also helped by investment. Conroy bought new machinery to make smaller batches of sunscreen, anti-wrinkle washes and skin-firming serum in a less labor-intensive way, and a new labeling machine.

The company created a weekly schedule too, clustering tasks instead of switching between them, that led to a bottle labeling rate of 120 per hour, up from 25 previously.

BIG COMPANIES

Jan-Emmanuel De Neve, economics professor at the University of Oxford, said 10% productivity gains may be a more realistic aim for most than the 20% boost that would come from shifting to four days and maintaining output.

Lilly Ellis, Production Executive works on skincare products at 5 Squirrels, a skincare company, in Hove, Britain April 18, 2023. REUTERS/Anna Gordon

But even so, he believes there is a moral case to try a shorter week when many workers report poor mental health. "It's been almost 100 years since we moved to the five-day week ... so it's high time that we start thinking more cogently about next steps," he said, referring to U.S. carmaker Henry Ford and his introduction of a five-day week in 1926.

While large companies have been more skeptical about the idea, the trials and the COVID pandemic, when millions of people suddenly switched to home-working, have forced employers to be more open-minded about different work practices. "There's a status quo bias. Employers are very reticent to try something new," said Jonathan Boys, senior economist at Britain's Chartered Institute of Personnel and Development, adding that some workers may want longer hours and more money. Other countries are trialing options. Spain is spending 10 million euros to subsidize small manufacturers so they can cut working hours by at least 10% while maintaining pay in an upcoming two-year trial. Among big companies looking at different options is Unilever, the global consumer goods giant which makes Knorr stock cubes and Dove soap and employs 127,000 people. It piloted a four-day week for its 80 New Zealand staff over 18 months, and has since extended it to 500 workers in Australia, a move it hopes will attract new talent. Nick Bangs, head of Unilever in Australia and New Zealand, said ruthless prioritization and the scrapping of unnecessary meetings helped drive sales in New Zealand while employees were less stressed and more energized. Absenteeism dropped 34%.

HIRING ADVANTAGE

Britain is suffering from an acute shortage of workers and larger companies have typically had an advantage when it comes to hiring, but some experts say moving to a four-day week could turn the tables.

Nick South, a senior partner at Boston Consulting Group, said smaller firms with more of a shared ethos might find it easier to switch to a new dynamic and that could give them an edge when it comes to hiring talent.

Unlike every other major economy, Britain's workforce in early 2023 was still slightly smaller than before the pandemic and vacancies were a third higher, reflecting an increase in early retirement and long-term sickness, as well as more full-time students.

"Bigger companies will probably find it harder to do at scale. So actually it gives small- and medium-sized companies something potentially really quite attractive in their proposition," said South, who advises on hybrid working.

Stellar Asset Management's Hine said the four-day offer made a massive difference when it wanted to add to its 30 staff. Conroy at Five Squirrels agreed, saying it had helped to lure scientists from established multinationals. "It's just much easier to get people that might have been hesitant over the line," he said.

British recruitment agency Reed.co.uk said it had seen a rise in the number of job advertisements offering a four-day week since the start of the year.

But four-day weeks did not work for all.

Allcap, a supplier of industrial components with 36 employees in western England, tried a four-day week after its staff had worked flat out during the pandemic to supply protective equipment and ventilator parts. But it struggled to respond to clients at all times and allow staff to also take annual leave and sick days, meaning workers in the warehouse could not cope. "It was creating as much pressure coming in as we were trying to release by giving time off in the first place," managing director Mark Roderick said.

(Reporting by Sarah Young and David Milliken; Editing by David Clarke)

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