Coronavirus: How the four day week provides a blueprint for a better society post-Covid-19

Thursday, 16 April 2020

Around the globe, as policymakers and business leaders look to the period beyond lockdowns and severe curtailment of normal economic, social and civic activity, concerns are being expressed that many organisations will be forced to consider a 4 day week as a strategy to reduce costs while retaining employment.

In this calculus, the week comprises of 80 per cent of the pre-coronavirus hours for 80 per cent of the pay.

Andrew Barnes, managing director of the country's largest trustee company Perpetual Guardian, the first company in the world to implement a 4 Day Week based on the 100:80:100 rule.

The challenge this presents to workers is a significant pay reduction, and the danger that this reduction remains permanent after a return to more normal economic conditions.

This was the experience of the Irish public service unions after the Global Financial Crisis (GFC); they accepted reduced hours and reduced pay only to see pay levels remain frozen while hours increased.

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4 Day Week Global is headquartered in New Zealand where, if a similar approach is adopted, the New Zealand labour market could be badly damaged for a long time.

The central thesis of the 4 Day Week is that businesses should work with their people to create true productivity measurements for the company as a whole and each individual role.

Treasury named productivity as New Zealand's biggest economic challenge and it remains the key to unlocking latent potential in the economy, which is based on a population the same size as that of the Irish republic.

Businesses around the world which have already trialled and evolved to a pre-Covid 4 Day Week are reporting they are well placed for survival, with enhanced corporate resilience and advanced productivity yardsticks.

Some report they are attracting new business in the midst of the pandemic.

The 4 Day Week is based on the 100:80:100 rule we have devised (100 per cent pay, 80 per cent time, 100 per cent productivity), whereby reduced hours are linked to an improvement in hourly productivity such that normal (like five-day) productivity is delivered in four days.

While drastic measures may be needed in order to preserve employment rates in many countries, it is imperative that any approach to maintaining employment is linked to a strategy to improve national productivity and to ensure that 'five-day' pay levels are restored promptly – while still delivering a reduced-hour week to workers.

This will have the correlated benefit of helping to stimulate post-lockdown economic activity, as many workers who have not suffered job losses or substantial pay cuts will be in a position to resume spending.

A feasible strategy could look like this:

Companies/organisations looking to reduce working hours and pay to the commonly proposed 80 per cent (but not reducing hourly rates) can apply to central or state government for a Productivity Top-up Assistance (PTA).

PTA is a government-funded assistance package which delivers the remaining 20 per cent of pay to the worker – for example, restores pay to a normalised five-day level.

Companies and organisations receiving this support have to make the following commitments:

To restore pay to normal five-day and 40-hour levels as soon as possible, within a maximum of 12 months from the commencement of the programme.
To maintain a 4 day/32-hour working week upon completion of the programme.
To implement a government-approved productivity review and productivity improvement strategy to deliver 100 per cent productivity in 80 per cent time.
To identify key training requirements - upskilling of workers and ensure that at a minimum 25 per cent (level can be determined) of the additional 'leave' days granted to workers are used for either in-house training or approved educational, upskilling or training causes.
Companies/organisations can adopt existing 4 Day Week employment guidelines which invite no changes to employment contracts or processes, i.e. workers retain normal legal protection.

The objective is to use the aftermath of this crisis to deliver a more productive, better skilled workforce enjoying improved work-life balance, with benefits such as:

Higher national productivity by unlocking the potential in normal business activity and freeing up government to focus on legislation, trade and economic activity, and foreign affairs.

Rebalancing of work/home life addresses the significant mental health issues in the workforce (one in five people at a given time will have a stress or mental health problem) by providing more rest time and mitigating the impact of reduced income (itself a key driver of work-related stress) by subsidising salaries and wages until productivity levels improve.

Economic benefits – by cementing flexible working (including home working, flexible shifts/hours and 4 Day Week), a Regus-commissioned study by independent economists estimates between $16.2 billion and $18.1b would be added to the New Zealand economy, and 74,000 to 83,000 additional jobs created.

Flexible working stands to contribute US$10.04 trillion to the global economy by 2030. Improved traffic flow, especially in typically congested cities like Auckland, could see between 1.5 per cent and 2 per cent added to the city's GDP; that is around NZ$3.5m per day, or NZ$1.4b to $1.9b annually.

Care responsibilities – an aging population will require higher levels of care, which means higher costs to families/governments. A 4 Day Week permits families to provide some extra care without affecting the family purse or placing undue pressures on time, and therefore straining family cohesion.

Gender pay gap / access to the C-suite – making a 4 Day Week the norm for both men and women will provide a better framework for sharing care responsibilities and will reduce barriers often faced by women returning to work after having children (and seeking reduced or flexible hours). Paying for output and normalising flexible work arrangements will significantly reduce the gender pay gap and lower the barrier for women to rise to senior positions.

Infrastructure – 4 Day Weeks and flexible working arrangements will reduce the pressure on existing infrastructure, reducing the burden of investment in roads and mass transit systems in a period of austerity.

Benefits of reduced commuting on the environment are maintained – around 28 per cent of all greenhouse gas emissions in the United States are transportation-related, and around the world the figure ranges from 20 per cent to 29 per cent.

A more highly and currently trained workforce – a free day each week provides a better framework for training, either within the company or externally, especially in industries threatened by the impact of artificial intelligence where there is an urgent need to retrain or upskill workers. (If this is combined with a 4 Day Week school programme, educational facilities would be widely available to deliver elements of this training.)

Boosts to local and hospitality economies – research indicates that 4 Day Week workers typically spend their weekly day off close to home, and it is anticipated that this will provide a boost to retail shops and eateries which have been hit hardest by the COVID-19 lockdowns in cities, regions and countries. Additional free time will also stimulate domestic tourism industries – a key strategy for this important sector in many economies if national borders are closed to visitors for some time.

More volunteering – a component of the productivity policy at Perpetual Guardian is that its employees have to give four days a year (the additional leave accrued annually on the gifted days off) to charity or community causes. This is a platform for the community spirit / help a neighbour activity we have observed under the lockdown in New Zealand.

A healthier population – more time to exercise, less time pressure on working families, more time to plan and prepare nutritious meals.

Andrew Barnes is the innovator behind 4 Day Week Global and the founder of Perpetual Guardian, the first company in the world to implement a 4 Day Week based on the 100:80:100 rule.