Four-day work week faces low-wage hurdle
Low wages and a weak union movement could work against New Zealand businesses looking to implement four-day working weeks, an economist says.
University of Auckland economics professor Tim Hazledine said rich countries, such as Germany, Denmark and Norway, have 35-hour working weeks (five sevenhour days), which works well as they are able to pay their staff a high hourly rate.
However, in New Zealand, low wages could restrict the possibility of a shorter working week, he said.
‘‘We don’t have high wages, and, for that reason, [we] haven’t chosen to reduce our hours per week, because our people think they need to work the full 40 hours just to keep afloat, economically.’’
On Thursday, trust company Perpetual Guardian announced it will launch a six-week trial in March, allowing its full-time staff to work for four days a week, but still be paid for five days.
If it is successful, the company will implement the policy permanently from July 1.
Perpetual founder Andrew Barnes said the idea behind the four-day week was to increase productivity and start a conversation that challenged the traditional working week. Workers would work 32 hours instead of 40 hours.
According to OECD figures, New Zealand ranks 20th among developed countries for number of hours worked each year.
In 2016, Kiwis worked an extra 389 hours compared the Germans.
Hazledine said: ‘‘If you work fewer hours, why wouldn’t you want to do that?
‘‘Well, you’d only want to do that if you could earn enough in those fewer hours to enjoy your leisure time, and look after your family. And in most countries, they can do that.’’
Hazledine believed the six-week trial would be successful.
However, the real test would be if workers could keep up productivity levels over a longer period of time, he said.
‘‘Any workforce who put their mind to it can boost their output over six weeks, but can they do it over six months or six years?‘‘
According to the New Zealand Productivity Commission, innovative firms grew on average at a faster rate than those that did not, but productivity stayed the same.
This is in contrast to numerous international studies showing that innovation is a key driver of productivity growth.