Iceland’s shift to a shorter working week has coincided with impressive economic performance, outpacing much of Europe, according to recent research from organizations advocating for four-day work weeks. The study highlights that between 2015 and 2019, Iceland implemented two significant trials of the four-day work week across government sectors, resulting in a landmark labor rights agreement that established the right to shorter working hours for the majority of the population.
The research findings emerge during a period of reevaluation regarding worker flexibility, particularly as companies like Amazon have begun calling employees back to the office. Despite the benefits of flexible schedules and reduced work hours in combating burnout and absenteeism, many organizations are hesitating to fully embrace these changes.
The trials involved reducing work hours to 35 per week—about half a day less—while maintaining employee pay. As a result, by 2022, 59% of Icelandic workers were offered reduced hours, a figure researchers anticipate has risen further in the subsequent years. A survey revealed that 28% of respondents were working a full day less each week, while another 22% managed their hours flexibly with their line managers, and 19% opted for shorter workdays.
Concerns regarding productivity typically accompany discussions about shorter working weeks. However, the research indicates that Iceland has bucked this trend. According to a joint study by The Autonomy Institute in the UK and the Association for Sustainability and Democracy (Alda) in Iceland, Iceland’s GDP growth surpassed both European and OECD averages, achieving a notable growth rate of 4.1% in 2023.
“This study shows a real success story: shorter working hours have become widespread in Iceland since the successful pilot schemes and the economy is strong across a number of indicators,” said Gudmundur D. Haraldsson, a researcher at Alda. The country’s low unemployment rate of 3.6% and a 1.5% increase in productivity rates further highlight the positive impact of reduced working hours, outpacing other Nordic nations.
While it is challenging to attribute an entire country’s economic success to a single workplace initiative, the evidence suggests that the reduction in working hours has not negatively impacted productivity—in fact, it may have contributed to economic resilience during challenging times, particularly as the tourism sector recovers post-pandemic.
“Overall, the Icelandic economy has remained strong post the introduction of a widespread shorter working week,” stated Will Stronge, director of research at The Autonomy Institute. He noted that the Icelandic example presents a contrasting approach for other European nations grappling with low productivity, often relying on outdated methods.
The researchers urged a broader implementation of reduced working hours, especially in the private sector. “The next step for Iceland should be encouraging even greater uptake in the private sector, so that the benefits of working time reduction can be felt by even more workers and businesses,” Haraldsson concluded.
