Working time reduction in the EU: recent patterns and main drivers
Conclusions
The average weekly hours of work per worker have been steadily decreasing in the EU and in the majority of Member States since 2008.This decrease reflects both the reduction in average weekly hours worked by full-time employees and the reduction in hours worked by self-employed people across the EU. The increase in the share of part-time workers has provided a smaller but constant contribution to the decline in hours worked across the EU since 2008. Within Member States, these same trends can be observed, with some exceptions.
Since the pandemic, hours worked and employment have started to react differently to the business cycle and hours worked have not fully recovered since then in most EU countries.Before the pandemic, hours and employment had reacted similarly to the business cycle: this trend was interrupted by the more frequent use of short-time work and similar job retention schemes in the COVID-19 recession. It is usual for hours of work not to return to their pre-crisis paths after recessions and this can be mainly due to adjustments to technological change.
The pattern of weekly hours worked shows marked differences between demographic groups.People in vulnerable situations in the labour market tend to work shorter weekly hours. This includes: (i) women, as they work shorter weekly hours than men on average; (ii) younger workers, as they are more likely to be employed part-time and work shorter hours in general; (iii) workers older than 50, due to shorter weekly hours in full-time employment or self-employment; (iv) workers with migrant backgrounds; and, (v) people with inadequate access to care services for children and elderly people. On the other hand, self-employed people and people with higher levels of education tend to work longer weekly hours.
Both underemployment and overemployment are present in the EU labour market.On the one hand, there is on average a preference for a reduction in working time at the aggregate level. Workers with higher levels of qualifications, female workers and people in occupations and sectors that face labour shortages are more likely to prefer working fewer hours. Since 2015, the average preference for working time reduction increased. On the other hand, underemployment can be observed primarily among part-time workers. More than a third of part-time workers would prefer to work longer, and for more than a fifth of them part-time employment was involuntary (i.e. they were employed part-time primarily because they could not find a full-time job). This is especially the case for female part-time workers. Moreover, unemployed people and workers who would be available to work but are not seeking can also be considered to be underemployed.
Hours worked are an important component and determinant of job quality.Across the EU, longer weekly working hours can be associated with higher job strain, a larger workload and hence lower job quality. In this regard, overtime is more frequent among women, older workers and people with tertiary educational qualifications. Working outside regular working hours, which is also an aspect of lower job quality, is more typical among young people, people who work long hours, and people with more than one job.
Past experiences with working time reduction policies, which were implemented in some Member States in the last three decades, showed some positive effects, though not on employment levels.Workers’ well-being is typically increased by reductions in working time, albeit the impacts may not be uniform for all groups of workers. The negative impact of the decline in overall hours on output has been historically compensated for by increases in productivity and by increases in the labour force participation of women and of older workers. On the other hand, these working time reduction policies have not been found to create significant employment effects, which confirms that the argument of a lump sum of labour in the economy is a misconception.
Further reductions in hours worked would need to be compensated, either by increases in productivity or in employment, to avoid a negative impact on the level and growth of GDP.The productivity impacts of the reduction in weekly hours would be different between sectors and occupations, which could trigger reallocation pressures in the labour market. In some sectors, it may not be realistic to expect an increase in productivity after a reduction in hours worked. Most empirical studies found a positive impact of working time reduction on hourly wages. However, this increase in hourly wages (to maintain the income of workers) could lead to increased work intensity, which would counteract the otherwise positive impact on workers’ well-being. Moreover, increase in wages or limited increases in productivity could reduce labour demand and hence employment. Evidence suggests that it is small reductions in hours in specific circumstances that may lead to a positive impact on employment.
The EU economy faces high labour shortages and a shrinking working-age population, which signal a need for an increase in the labour supply and hence a constraint on potential large-scale working time reductions.Labour shortages are rising amid the acceleration of the twin digital and green transitions, and the shrinking working-age population is putting pressure on labour markets and welfare states. In this context, the scope for large-scale working time reductions may be limited. However, new forms of work are more accepted after the COVID-19 recession, and workers express a preference for better work-life balance. Thus, flexible work arrangements can help some companies to recruit and retain talent. To further inform the debate, more research is needed on the productivity, employment and environmental impacts of working time reduction.
Based on past evidence, mandatory legislative reductions in working hours may not improve the welfare of workers with different preferences, and tailored solutions could better address underemployment and overemployment.Indeed, options that broaden the choice of weekly hours, within the limits of the EU’s working time directive, could better address the simultaneous presence of underemployment and overemployment in the EU labour market. One option could be reduced weekly hours for some groups of workers, either through collective agreements or through companies’ voluntary re-organisation of working hours. Another measure could be to reduce administrative barriers to broaden the options available to adjust the hours worked by the underemployed, while respecting the upper limits on working time, enforcing equal treatment between part-time and full-time employees and addressing the potential risks of flexibilization.