Time For Change: a four-day week as an unemployment strategy

As the furlough scheme comes to an end, and firms across the economy continue to suffer from the effects of social distancing measures, bold economic strategies are required to support the economy and forge a recovery process that prioritises secure and decent work.

Certain sectors require government attention more than others, namely hospitality, retail and the arts, which remain at risk of significant lay-offs and in the case of retail have been in stark decline even before Covid hit the economy.

A shorter working time subsidy scheme (SWTSS) is proposed as a targeted strategy to support these industries in the short-term, preventing layoffs, but also to help them transition to more desirable working time patterns in the longer-term.

Such a scheme follows from the similar German Kurzarbeit scheme, recognised as the ‘gold standard’ by the IMF as well as the Temporary Short Time Working Compensation Scheme (TSTWCS) overseen by the Thatcher government in the 1980s.

The scheme would involve a five-year taper which would greatly reduce the state spending involved as well as allow for a gradual transition to a ‘new normal’ of shorter working weeks.

In this paper “Time For Change: the four-day week as a strategy for unemployment” the authors outline the coordinates of how such a ‘shorter working time subsidy scheme’ (SWTSS) could function in the UK’s Covid and post-Covid economy, complete with some estimates of costs and hypothetical case studies.

Will Stronge, Director of Research at Autonomy, said:

“As the furlough scheme comes to an end and firms across the economy continue to suffer, bold economic strategies are required to support the economy now and forge a recovery process that prioritises secure and decent work.

“Shorter working time has been used throughout history as a way of responding to economic crises as it enables work to be shared more equally across the economy.

“Instead of propping up an already failing economy, the government could act to save jobs and create more desirable working patterns for the future.”

Clive Lewis, Labour MP for Norwich South, said:

“A Shorter Working Time Subsidy Scheme is a fantastic idea as it would retain jobs and create more desirable working hours in our labour market.

“Post COVID-19, the four day week is gaining in popularity across the world and I sincerely hope the Treasury will agree to explore these proposals”.

Howard Beckett, Unite’s Assistant General Secretary, said:

“This campaign should be supported unequivocally by Labour. 

“It is only by reversing out the intended changes to the Job Retention Scheme and extending it into 2021 that we can avoid mass job losses. The scheme should now be adapted to support shorter working weeks and job sharing. 

“Such steps are essential to ensure workers do not pay for this crisis with their jobs and austerity.”

Autonomy Podcast · BBC Radio West Midlands 29/05/2020 COVID and the 4 Day Week

Report Authors: Philipp Frey, Phil Jones, Ishan Khurana, Lukas Kikuchi, Will Stronge