Reducing a 55-hour work week by two hours would have a positive impact on productivity. But at 40 hours a week, as in Luxembourg, “it is less likely that the effect on productivity will be positive,” explains Muriel Bouchet. Photo: Guy Wolff/Maison Moderne/Archives

Reducing a 55-hour work week by two hours would have a positive impact on productivity. But at 40 hours a week, as in Luxembourg, “it is less likely that the effect on productivity will be positive,” explains Muriel Bouchet. Photo: Guy Wolff/Maison Moderne/Archives

The subject of shorter working hours, revived by the LSAP, is a divisive one, particularly regarding its impact on business productivity. This can be positive, according to Muriel Bouchet of the Idea Foundation, but only if the working week is long at the outset. This is less likely with a 40-hour week.

The election campaign should not avoid a debate on working time. The minister of labour, (LSAP), has made it his hobbyhorse and in mid-January he even declared on RTL that he was not opposed to a reduction of the working week to 36 hours.

The reaction from business circles was swift: “Such a generalised measure would sound the death knell of the attractiveness of our economy and of the Luxembourg model as a whole,” reacted the director of the Chamber of Commerce, , on Twitter. “Who would pay the 10% salary cut?” asked UEL director on the same social network. A state bonus? The employer?

Productivity at the heart of the debate

Engel said he wanted an objective discussion on the subject, based on a study he had requested from Liser and which was due to be published in March. According to the minister, a discussion is necessary to ensure that Luxembourg remains attractive for employees.

The impact of such a measure depends, of course, largely on the modalities of its implementation (centralised, homogeneous, flexibility according to the sector of activity, reduction or maintenance of the salary, flexibility of overtime), which have not been explained. But one of the key factors in the case of a reduction in working time is the impact on productivity.

“This determines everything,” says Muriel Bouchet, economist and director of the Idea Foundation, a think tank of the Chamber of Commerce. In the case of a switch to a 36-hour week, “if productivity increases by 10%, then the situation is ideal, and such a measure is much easier to adopt,” he believes.

Variable consequences

But the reality is not so accommodating. According to Bouchet, the impact on productivity varies according to the starting length of the working week: the longer the week, the more positive the impact on productivity of a reduction in working time. More specifically, beyond 50 or 60 hours of work per week, the impact on productivity is favourable, simply because workers are more fit and make fewer mistakes.

Thus, reducing a 55-hour work week by two hours would have a positive impact on productivity. But at 40 hours a week, as in Luxembourg, “it is less likely that the effect on productivity will be positive,” explains Bouchet. Thus, in the event of a reduction to 36 hours, “we cannot expect a 10% increase in productivity, so there would be a loss of productivity for companies,” adds the economist.

Slippage in labour costs

And the consequences for them could be “harmful”: less staff available for the same production could, without an increase in productivity, lead to a slippage in labour costs. In addition, as the need for jobs increases, some sectors that are already facing labour availability problems would come under pressure. “This would reinforce the bottleneck,” says Bouchet.

The potential macroeconomic consequences should not be overlooked either, the economist points out: according to Idea’s simulations, with unchanged GDP and productivity, 955,000 jobs would be needed in 2050. However, in the event of a 10% reduction in working hours, 100,000 more jobs would be needed. This implies more net immigration, and therefore even more pressure on housing and mobility.

In the opposite hypothesis--if GDP falls--it would then be “more complicated to finance social systems, retirement…” Bouchet therefore recommends “caution” in the event of manipulation of the duration of working time.

The unlikely majority

In any case, it is difficult to imagine which majority would support such a development. The political opponents of the LSAP dismissed such a possibility out of hand: the DP, in the person of the Prime Minister, , was more in favour of flexible working hours during his press conference.

This is also the case for the CSV: , recently appointed head of the national list of the Christian Social Party, declared : “In my opinion, we should move towards a flexibilisation of working time within companies rather than a reduction in working time.” Consensus seems far away.

This story was first published in French on . It has been translated and edited for Delano.

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