Can Germany afford a 4-day workweek?

World Sunday 24/September/2023 16:05 PM
By: DW
Can Germany afford a 4-day workweek?

Berlin: According to the latest figures from the Organisation for Economic Cooperation and Development (OECD), Germans worked an average of 1,349 hours per employed person in 2021. The OECD average was 1,716 hours, while Greeks worked 1,872 hours per year.

Despite Germans putting in fewer hours a year, the country's powerful metalworkers' union IG Metall recently came up with a proposal pushing for an even shorter workweek for its members: namely, four days.

Assuming fully compensated wages, any worker would support such a proposal. But in times of a slowing German economy and an acute shortage of skilled workers, shouldn't Germans be working more rather than less?

Lazy Germans?
The OECD itself has admitted that its figures are skewed and, due to different reporting standards and time references, can't really be compared. Also, what people in different countries consider working hours may not necessarily be the same, it said in its report.

Labor market expert Enzo Weber from the Institute of Employment Research (IAB) says the OECD's figures tend to be based on public surveys, meaning the results principally depend on the questions being asked and in what order.

"What people understand of working hours isn't necessarily everywhere the same," he told DW, adding that OECD figures are generally intended to illustrate labor market trends rather than serving as a basis for comparison.

Weber noted, for example, that the labor force participation rate of German women is significantly higher than that in other countries. However given that roughly half the women work part-time, this lowers the average annual working hours per person. "That doesn't mean Germans work less, quite the contrary. More work is being done, because these women would not even be included in the statistics," said Weber.

Productivity is what matters
The number of hours people spend at work cannot be viewed in isolation. The question is what are they doing and how productive are they? German workers do much better in the productivity rankings, Weber said, even though the "glory days" of Germany as a productivity powerhouse are long gone.

Currently, productivity is falling, he said, which isn't the result of German workers being lazier than last year, however.

Calculating productivity is a complex exercise, but basically divides output by the hours worked. Weber attributes the present decline to the energy crisis. Despite the higher costs, German companies are keeping their workforces fully employed to avoid future shortages. As a result, working hours in total remain stable while output shrinks due to higher energy costs.

Another reason for falling German productivity is the country's huge low-wage sector, where productivity is typically not very high.

4-day workweek a productivity booster?
A key question in the current debate about a 4-day workweek is whether or not it can improve productivity amid a shortage of skilled labour. Proponents argue that shorter hours may increase the motivation of workers and subsequently make them more productive. Additionally, they say this could bring people into the workforce who are not willing to work five days a week, resulting in the availability of more skilled workers.

Since 2019, the nonprofit organisation 4 Day Week Global (4DWG) has organised pilot programs in countries like the UK, South Africa, Australia, Ireland, and the United States. More than 500 companies have participated in these programs, according to the New Zealand-based NGO. Results seem to confirm hopes for a positive outcome.

Reactions among German workers to plans for a 4-day workweek remain mixed, however, according to a survey conducted by Germany's trade union-affiliated Hans-Böckler Foundation.

About 73% of the workers surveyed said they want a 4-day workweek, but only if their pay stays the same. Some 8% would accept reduced remuneration, while 17% rejected the shorter working time outright.

Inconclusive studies
In Germany, a 4-day workweek program was launched on September 21 inviting companies to apply for a 6-month test period. The program is run by the German consulting agency Intreprenör in collaboration with 4DWG.

Enzo Weber argues the design of the pilot already highlights the main problem with such projects. Only companies with a positive attitude towards a shorter workweek would participate, he said, meaning the large majority of businesses would remain unrepresented.

Furthermore, the pilot foresees not only reducing working time but also altering processes and organizational structures in the participating companies. Any increase in productivity, therefore, may not necessarily be linked causally to the shorter working week, said Weber.

The IAB labor market expert also questions the idea of positive results. Reducing the workweek by one day would likely increase employees' daily workload while reducing communication and teamwork. "Companies usually don't feel the consequences immediately, but rather in the medium term," said Weber. He pointed to the 6-month project design, which was too short.

For Holger Schäfer, introducing a 4-day workweek is counterproductive from a macroeconomic perspective. The economist from the Institute of the German Economy (IW Cologne) told DW that offering shorter hours might help a company to "poach scarce workers from competitors" but would not help the economy as a whole. "If all companies reduce working hours, it ultimately results in a working hour deficit," he said.

Schäfer argued there is no evidence that reducing working hours could significantly increase productivity. "Reducing the workweek from five to four days corresponds to a 20% reduction in working hours. To compensate for the resulting production loss would require a productivity boost by 25%, which is unrealistic."

'X-Day Work Week'
Nevertheless, introducing a 4-day work week in some sectors of the economy may make sense, says Jörg Dittrich, the president of the German Confederation of Skilled Crafts and Small Businesses (ZDH).

Craft businesses could make themselves more attractive to qualified workers, he told DW. However, he admitted that not all crafts may benefit. He rejected broad-based nationwide regulation saying it would only mean additional bureaucracy for companies.

Enzo Weber also advocates against a legal entitlement and for individual solutions under a plan he calls X-Day Work Week. Weber's plan is supported by Germany's small- and medium-sized companies. Calling for individual company-based solutions, the sector's lobby organization BVMW flatly rejects any government intervention that proposes less working time at full pay.

Despite the criticism, the German metalworkers' union IG Metal is planning to push ahead with its 4-day work scheme in the upcoming wage negotiations for steel workers, said union boss Knut Giesler — including, of course, full wage compensation.