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The Icelandic Shorter Working Week Phenomenon
An Economic Triumph
Iceland’s economy appears to be leaping ahead of its European counterparts. Interestingly, this occurs after the nationwide adoption of a shorter working week with no pay cuts. According to a recent study, Iceland logged faster economic growth than many European nations. The unemployment rate is among the lowest in Europe, the Autonomy Institute in the UK and Iceland’s Association for Sustainability and Democracy (Alda) noted.
The Genesis of an Experiment
What brought Iceland to such gallant heights? There were two extensive trials between 2015 and 2019. During this period, more than 2,500 public sector employees participated. They reduced their workweek to 35-36 hours without any loss in pay. Before, many had been on the standard 40-hour week. This represents over 1% of Iceland’s workforce at the time.
| Year | Number of Employees | Initial Hours Worked | Revised Hours Worked |
|---|---|---|---|
| 2015-2019 | 2,500 | 40 | 35-36 |
A Shift in Employment Practices
The success of these trials led to significant changes. Following the experiments, Icelandic trade unions managed to negotiate reduced working hours for a significant portion of their members. Consequently, an estimated 51% of workers accepted shorter working hours, with the number likely higher today.
Economic Growth Amid Improved Wellbeing
The benefits have been manifold. A researcher at Alda, Gudmundur D. Haraldsson, expressed that the shorter working week has proven successful. He emphasized that it bolstered the economy and improved several quality-of-life indicators. Workers reported higher well-being and productivity either maintained or improved in most workplaces. Stress and burnout levels decreased remarkably.
Global Interest in Four-Day Work Weeks
Other countries are also taking notice of the shorter working week model. For instance, a globally recognised trial in 2022 involved 33 companies, predominantly in the US and Ireland. Similarly, the UK is currently conducting its own trials to explore viability.
Economic Growth and Challenges Ahead
Iceland’s economic leaps continued into 2023, with an impressive expansion rate of 5%. The International Monetary Fund reported that this rate is only surpassed by Malta in rich European economies. However, some challenges lie ahead. The IMF forecasts slower growth due to softening domestic demand and reduced tourism spending expected next year.
Iceland’s Employment Climate
While unemployment in Iceland is a mere 3.4% compared to the European average, it is forecasted to rise slightly to 3.8%. However, analysts affirm that a low unemployment rate signifies robust economic health. Alda and the Autonomy Institute described it as a positive indicator.
Overall, Iceland’s shorter working week appears to not only enhance society’s work-life balance but fortify its economy as well. The nation’s experiment might soon inspire changes in employment practices worldwide.
