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Labour’s four-day-week policy: already working well for companies in New Zealand, Scotland, England and Ireland

John McDonnell, the shadow chancellor, told the Labour conference in September that the party would reduce average full-time hours to 32 a week within a decade “with no loss of pay”. People should “work to live, not live to work”, he said.

Phantom research?

The Times cites research by the Centre for Policy Studies, ‘The most influential think tank among Conservative MPs’, which was not revealed on their website. It was said to allege that reducing the hours of public sector employees, including doctors, nurses, teachers, firefighters and police officers, would be costly because the workforce would have to expand.

That is not the experience of 4-day companies in New Zealand, Scotland England and Ireland

The ITV News website covers theory, adding statistics and recording at length the findings of Edinburgh restaurant Aizle, which has enjoyed its best financial year after moving to 4-day working. Its owner says the improvement in staff morale, which has helped to recruit and retain willing workers, has been the biggest positive.

It briefly refers to a New Zealand financial services company initiated the four-day-week and claimed it boosted productivity by 24%. Henley Business School research also mentions Perpetual Guardian, the New Zealand estate management firm, one of the first to go public with a research-backed assessment of its trial, before adopting the policy in November 2018, having found that productivity was unharmed by the shortened working week,

Another company Think Productive in Brighton and Hove switched seven years ago. It changed its five-day week into four extended weekdays and one Friday in four after a three-month trial, but staff are still given the option to work a traditional five-day week: “Most don’t, choosing to lose two commutes and gain the freedom of an extra day to pursue personal and professional interests beyond their primary income”.

Recruitment firm ICE Group this year became the first company in Ireland to adopt a four-day week for all its staff.

Henley Business School research: four-day week pays off for UK business

Henley’s ‘Four better or Four Worse?’ White Paper has gathered opinions from over 250 businesses who currently operate with a four-day working week.

  • Two thirds reported improvements in staff productivity.
  • The move has already saved implementing businesses an estimated £92 billion annually
  • Three quarters of Brits back a four-day working week
  • 67% of Gen Z say it would drive them to pick a place to work.
  • 64% of those businesses who have already adopted a four-day working week have reported improvements in staff productivity.
  • 78% of implementing businesses said staff were happier, 70% less stressed
  • 62% took fewer days off ill..
  • 63% of employers said that providing a four-day working week has helped them to attract and retain talent.
  • 40% of employees said they use the time to upskill or develop professional skills.
  • 25% said they use their fifth day to volunteer.
  • 34% of business leaders surveyed and 46% of those in larger businesses, say making the switch to a four-day working week will be important for future business success.

The study shows that UK workers are keen for this workplace shakeup, with nearly three quarters (72%) agreeing it’s an attractive proposition and would be a firm driver when picking an employer. This is particularly important for Gen Z – with two thirds (67%) saying it would influence their choice of employment.

The research also added that, despite the financial, environmental and wellbeing advantages, 73% of employers cite concerns around taking up the change, with client and customer servicing and the need to be available, noted as the main barrier for 82% of businesses.

The four-day week also demonstrates a positive impact on the environment, as employees estimate they would drive 557.8 million fewer miles per week on average, leading to fewer transport emissions.

Quartz magazine presents new evidence that working less is good for productivity. In August 2019, Microsoft Japan embarked on a four-day week trial. Every Friday it closed the office and gave roughly 2,300 full-time employees a paid holiday.

Trending

According to an article in Sora News 24, there was an enormous jump in productivity. Based on sales per employee, workers were almost 40% more productive than they were the same month a year earlier, while staff stress levels were dramatically improved.

Other productivity hacks (shortcuts, tricks or strategies) were encouraged, including limiting meetings to 30 minutes and suggesting that instead of calling meetings, employees could more fully utilize software available for online collaboration.

Cassie Werber commented yesterday: Microsoft Japan’s trial is significant because it’s the biggest yet in terms of staff numbers and the apparent effect on productivity. It’s caught the global imagination, perhaps, because Japan’s work culture is seen as particularly punishing. If a big Japanese tech company can change its ways and achieve startlingly better results, perhaps there’s hope for us all”.

 

 

 

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The Financial Times offers two perspectives on the shadow chancellor’s economic proposals

Earlier this month the FT warmed to the shadow chancellor. Following Jim Pickard’s first respectful report on any aspect of Labour policy, an article, by Jim O’Neill, chair of the Chatham House think-tank and former Treasury minister, had the headline, “The UK opposition steps into an economic void left by a government grappling with Brexit”.

 

Following a couple of caveats, O’Neill writes: “In at least six policy areas, which Mr Corbyn and his shadow chancellor John McDonnell are treating as priorities, businesses and the government need to catch up (detail here)”.

  • The first area on which Labour sees clearly is Britain’s productivity crisis.
  • Second is the orthodox belief that lower corporation tax will magically boost investment spending.
  • Third, risking large amounts of money on fixed investment no longer appears attractive.
  • Fourth, businesses need to rediscover profit with purpose.
  • Finally, there is the housing crisis.

But today there was a decided change of direction – had the editorial board been leant on?

THE EDITORIAL BOARD: Labour’s economic plans have serious flaws: shadow chancellor John McDonnell is ignoring the realities of modern business. The following – mainly speculative – points fail to convince:

  1. Mr McDonnell’s most eye-catching announcement was a compulsory share ownership scheme. Employee ownership and other profit-sharing schemes are by no means outlandish. Many businesses already choose to run them in order to recruit and motivate their workforce. There are also sound political reasons to give employees a greater share of ownership and a bigger voice on boards after a decade in which wages have remained stagnant in real terms. But companies should not be coerced into taking such action.
  2. Mr McDonnell claims these proposals are designed to tackle Britain’s productivity crisis – the evidence for this is sketchy and outdated.
  3. It could increase the cost of capital and deter investment.
  4. As the scheme would bear only on employers with more than 250 workers, it could also disincentivise growing businesses.
  5. There is a real danger that Labour’s prescriptions may end up only harming the patient.
  6. Businesses (and many voters) are concerned that the proposals on the table may only be the tip of Labour’s interventionist ambitions.
  7. With Brexit representing a step into the unknown, however, the UK needs to preserve business and economic stability, not further radical experimentation

Then a reversion to something approaching approval

“Nationalisation, dilution of shareholdings, workers on boards, sweeping trade union powers — John McDonnell’s economic prospectus for Britain is the Labour party’s most radical in several decades. The shadow chancellor further developed the party’s socialist credentials in his address to its conference in Liverpool on Monday. He senses that the appetite for change is great enough to take Labour into office on a hard-left ticket at the next election”. And: “Labour’s policies do speak to the mood of many voters. Many Britons believe inequality is growing, public services are collapsing and the excesses of capitalism need taming”.

Though not as wholehearted as the conclusion of former Treasury minister O’Neill:Dealing with the UK’s deep-seated economic problems requires sustained thinking and attention, not just occasional lip service. The Labour Party has stepped into the vacuum left by the government and appears to be offering the radical change that people seek.

End note: email from Moseley hit harder than the editorial board: 

  • Looking forward to a rise in the number of companies with 249 employees, if any stay in the UK, should the nightmare come about at the next election ( Ed: as share ownership proposals apply only to companies with over 250 employees).
  • The shadow Treasury team admits that private, unlisted companies could not be compelled to hand out dividends to workers. In theory that could incentivise public companies to delist from the stock market.
  • The next problem is that foreign-listed companies will not be obliged to hand equity to their UK workforces. Again, that could provide an incentive for London-listed companies to switch their listings to an alternative financial centre such as New York or Frankfurt.
  • Nor is it clear how the British government could force an overseas company with a London listing to comply with the scheme if most of its workers are abroad.
  • One group of workers who could feel aggrieved by the proposals are those in the privatised utilities such as rail and water. Labour is determined to nationalise the utilities, and admits that — as state workers — staff would no longer be eligible for the share scheme. At present a third of employees in United Utilities participate in their employee share scheme, as do two thirds of South West Water employees and 70 per cent of Severn Trent’s UK employees.
  • Another complication is that some companies could find alternative routes to rewarding shareholders, for example by carrying out share buybacks instead of dividends.

 

 

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