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'Six-hour work day will hurt Sweden'

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08:20 CEST+02:00
The six-hour workday would punish employers who already struggle to find competent staff. And if parts of the economy slow down, so will industries reliant on them, argues liberal commentator Nima Sanandaji.

Gothenburg recently announced a political experiment. Some public employees will transition towards a six-hour work day, but keep their full time wages. The left-of-centre majority hopes to prove that fewer working hours is a viable option for the near future.

Working less is a popular idea also on the national level. The Greens want shorter days plus seven extra days off work a year for parents with small children. And they want the state to pay benefits to people who want to take a sabbatical. The Left Party also wants the six hour work day, which it included in the party's recent ten-year plan.

Working less, earning as much. It sounds tempting. But political action to reduce working time risks, in my view, increasing unemployment, funding shortfalls for the welfare state, and increased inequality.

The people who say yay say this: If a person cuts their hours, it creates surplus work that an unemployed person can take on. But I've found that little research gives support for this hypothesis. 

In the study “The myth of worksharing”, Arie Kepteyn, Adriaan Kalwij and Ashghar Zaidi argue that fewer working hours does nothing to employment rates. Based on Swedish data, Tor Jacobson and Henry Ohlsson have found that there is “no long-term relation between hours per worker and employment”.

Jobs aren't commodities that you can just share with someone else. At present, many Swedish employers struggle to find competent staff, for example in the manufacturing industry where a lack of technical know-how among job seekers has slowed down production.

If Swedish engineers cut their hours, production would slump even further.

That would put the brakes on other parts of the industry, for example subcontractors but also the hospitality industry that feeds those engineers for example. 

But what about jobs that require few or no special skills?

One of the key problems on the Swedish employment market is that few entry-level positions exist. Merely five percent of the jobs in Sweden require no special knowledge, which is the lowest share among the EU countries. The few entry level positions could, at least in theory, be subject to job-sharing.

And reduced hours has done little to reduce wages. In fact, as people stay on the same salary, the average cost of labour per hour goes up. This does not benefit the unemployed, who would be seen as even more expensive to would-be bosses.

Then there is the simple notion, held forth by people who love this idea, that we can be as effective in six hours... I am far from convinced. As a general rule of thumb, if we work less, we produce less.

The National Institute of Economic Research, an independent wing of the finance ministry, found that reducing hours quite simply reduced how we use capital and how much we produce.

Put simply, if we work 25 percent less, our standard of living would fall by a quarter too.. As will funding for the welfare state.

Maybe an individual family would feel fine with reducing how much they spend on food, gadgets, toys, trips etc, but the welfare sector? How many people in Sweden would accept fewer (or worse) schools, hospitals, and home for the elderly?

I also think we should be talking not of decreasing hours worked, but the opposite.  

Income inequality in Sweden shows up not just in people's salaries, but is evident in how many hours they work, the Confederation of Swedish Enterprise (Svenskt Näringsliv) has found in a tally. The quarter of Swedes with the highest incomes work some 64 percent more hours than the quarter with the lowest incomes.

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Ironing out the difference in hours worked would already today slash 70 percent off the income gap.

So how would reducing working hours affect equality? The self-employed already set their own working hours. Partners in firms and those aiming for high-achieving careers also often choose to work more hours than their employers’ demand of them.

The people who work more, and earn more, don't listen listen to political dictates. We do not, after all, live in a planned economy. 

Work-hour reducers instead take aim at the badly paid public sector which employs a lot of women. It will, I argue, entrench inequalities rather than sandpaper them down. 

Cutting work hours brings with it more problems than its proponents wish to acknowledge. The same parties that wish to fight inequality are proposing a policy which would take Sweden in the opposite direction. 

Nima Sanandaji is a regular op-ed contributor to The Local.
His latest book is called “Renaissance for Reforms”, co-authored with Stefan Fölster.

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