Iceland’s innovative move to a shorter work week has garnered international attention due to its significant outcomes for the economy and workforce.
Research indicates that since the transition to reduced working hours, Iceland has experienced superior economic performance compared to many of its European counterparts.
Iceland decided to implement a shorter work week between 2020 and 2022. During this period, 51% of the nation’s workforce opted for reduced hours, some transitioning to a four-day work week. This move was backed by research from Icelandic and international think tanks, suggesting an increase in this adoption rate over time.
Between 2015 and 2019, trials were conducted in the public sector where employees worked 35-36 hours per week without a reduction in pay. Over 2,500 people, accounting for more than 1% of Iceland’s workforce, participated. The trials aimed to maintain or enhance productivity while improving employees’ work-life balance. Productivity either remained stable or improved, while employee wellbeing saw significant enhancement.
In 2023, Iceland’s economy expanded by 5%, second only to Malta among affluent European economies, according to the IMF. This growth rate greatly surpassed the nation’s average of nearly 2% from 2006 to 2015. Despite an anticipated slowdown, Iceland’s current unemployment rate, at 3.4%, remains one of the lowest in Europe.
The four-day work week has been trialed in various countries, showing promising results. In 2022, a test across 33 companies, primarily in the United States and Ireland, echoed Iceland’s positive outcomes. These trials indicate a global reevaluation of traditional work schedules, with many firms considering permanent adoption.
According to the IMF, Iceland’s economy remains strong, driven by low unemployment and high productivity. The nation’s unemployment rate was 3.4% last year, highlighting economic vitality. Forecasts suggest a slight increase in unemployment to 3.8% in subsequent years, but overall stability in economic indicators remains a positive sign.
Iceland’s bold initiative to adopt a shorter work week has led to considerable economic success. The trials have not only maintained but enhanced productivity while significantly boosting employee wellbeing. As other nations observe these outcomes, Iceland’s approach could serve as a compelling model for future workforce policies globally.
