Economic Update

Published 06 Mar 2023

− The Covid-19 pandemic reshaped global work culture

− Multiple markets and companies are considering benefits of a four-day work week

− Productivity, worker well-being and resource conservation are all key motivators

− Reduced work hours could also help reduce carbon emissions and improve air quality

With the Covid-19 pandemic having changed how people learn, shop and do business, many markets and companies are experimenting with new ways to unlock potential productivity while improving workforce well-being.

A recent study organised in the UK by non-profit 4 Day Week Global looked at the effects of a four-day work week at 61 companies with a total of around 2900 workers from June to December 2022. The pilot programme included both non-profit and private firms in sectors including recruiting, software and manufacturing, with companies allowed to deploy shortened weeks as long as employees received the same pay for a reduction in working hours.

Of the participating companies, at the end of the pilot 56 chose to continue with the new shortened schedule, with 18 making the change permanent and the remaining 38 planning to reassess the benefits of the new schedule at a later time.

While the most evident benefits of shorter work weeks were employee satisfaction and a better work-life balance, companies reported that revenue increased 1.4% on average during the trial period, with that figure rising to 35% in comparison with the same period of the year before, suggesting the model has the potential to support companies’ expansion plans.

The deployment of the four-day work week remains in a nascent stage. While the long-term benefits of such a major change to global working habits have yet to be examined, a number of emerging markets are experimenting with similar changes in an effort to maximise resources, and improve productivity and health.

Fewer days, higher productivity

Given the increasing capacity of artificial intelligence and other technologies to streamline workflow, a future in which people works less is becoming increasingly likely. Especially as emerging markets were particularly affected by the Covid-19 pandemic – with their populations experiencing heightened levels of unemployment during the early years of the health crisis, as many were employed in low-skilled or informal positions – some are looking for ways to balance productivity outcomes with fewer working hours.

The most notable experiment in new working schedules was implemented in Sharjah in the UAE, where the government implemented a four-day work week for public sector employees at the beginning of 2022. Private companies, meanwhile, are allowed to decide whether they will implement the three-day weekend. Importantly, while the number of workdays was reduced, the number of hours worked per day increased slightly, with most companies extending the workday by 60 to 90 minutes.

The move came after an emirate-wide shift to a four-and-a-half-day work week for federal employees was announced in December 2021.

An evaluation study of the new system in Sharjah conducted in early 2023 under the supervision of the Sharjah Executive Council reported an 88% increase in employee productivity, a 74% increase in work attendance and a 46% decrease in sick leave usage.  

The shift in work schedule has also benefitted both the tourism and hospitality industries, as more leisure time has prompted people to dine out or travel domestically, helping to mitigate off-season dips experienced by hotels and other tourism-related businesses.

Elsewhere, starting on March 1, 2023, 28 South African companies and one Botswanan firm are participating in a four-day work week trial conducted by 4 Day Weeks South Africa. The companies range from marketing agencies to ICT service providers, many of which identified employee well-being as a top priority for 2023. Another pilot phase with a new host of companies is slated to begin in May of this year.

Private firms are pioneering the adoption of the four-day work week in other emerging markets. In Indonesia, peer-to-peer lender Alami made the shift in 2021, citing improved productivity and employee mental health.

Meanwhile, under new labour codes introduced in 2022, companies in India can choose whether to implement a four-day work week or retain the five-day model. However, employees working a four-day week have to work 12-hour days to comply with the countrywide 48-hour weekly requirement, which poses a challenge in sectors such as manufacturing, where working days are capped at eight hours by the Occupational Safety, Health and Working Conditions Code passed in 2020.

Maximising resources

Another prominent argument for the four-day work week in emerging markets is resource conservation.

Limiting working days translates into less time spent commuting for many employees, and on a local scale it means reduced traffic and fuel consumption in areas where high commodity prices are weighing on government budgets and prompting inflation.

In March 2022 the city of Iloilo in the Philippines implemented a four-day work week for public offices as a cost-saving measure, hoping to conserve energy and limit the impact of rising fuel prices. While some places of work, such as health centres, would continue a five-day schedule, those taking part in the scheme extended their working hours from 7.00am to 6.00pm to cover the required 40-hour work week. As an additional energy-saving method, the municipality deployed a ride-sharing scheme to help employees reach their workplace without the use of private vehicles.

In mid-2022 the Department of Energy of the Philippines recommended the country-wide deployment of a four-day work week and extended telework arrangements as fuel prices rose, although the schedule has yet to be widely deployed. The country previously adopted a shorter work week during fuel-price highs during the Gulf War and in 2008, driven by soaring demand and limited production.

In February 2022 the Central Bank of Sri Lanka proposed reducing the work week to four days, with working hours between 9.00am and 3.00pm, while also discouraging the use of private vehicles, to help combat the foreign exchange and fuel shortages affecting the country.

Reduced hours, reduced emissions

Although the scheme has yet to be implemented on a large scale, research suggests that a reduction in working hours could also help reduce carbon emissions, an essential step in combatting air quality concerns in the urban areas of many emerging markets.

One study conducted by the Political Economy Research Institute at the University of Massachusetts Amherst in high-income countries suggested that a 10% decrease in working hours could cut emissions between 8.6% and 14.6%, mainly as a result of less commuting.

Reduced commuting translates into a reduction in traffic on urban roads, which in turn can help lower levels of air pollution. According to that year’s “State of Global Air” report, air pollution was responsible for approximately one in nine deaths on a global scale in 2022. With the UN estimating that 68% of the world’s population will live in urban areas by 2050, a reduction in commuting time could significantly mitigate air-quality and health concerns worldwide.

With the carbon footprint of data storage attracting increasing scrutiny, the decrease in online traffic also factors into the environmental benefits of the four-day week. The power usage of a single data centre is roughly equivalent to that of 50,000 homes, with the data centre industry producing more emissions than aviation in 2022.