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FALQs: The Icelandic Reduced Workweek Trial

This blog post is part of our Frequently Asked Legal Questions series.   

[Office work], Harris & Ewing (1936). Library of Congress Prints and Photographs Division, //hdl.loc.gov/loc.pnp/hec.40971 .

During the first year of the COVID-19 pandemic the world saw a surge in remote work, potentially changing the way many of us work forever. But even before the pandemic, people seeking a better work-life balance were looking at reinventing the work structure, including pursuing the potential of reduced work schedules without any reduction in pay.

Progress toward a regular eight-hour workday in the United States can be said to have begun in 1866 and made strides in the 1930s. Although commonly understood as the global norm today, the 40-hour workweek has its exceptions. For example, in Norway a 37.5-hour workweek is the norm in all collective agreements. Similarly, Denmark has established a 37-hour workweek as its norm. Moreover, the United Arab Emirates announced just last month that the work week would be reduced  to 36 hours for “public sector employees at the ministerial level,” or four and a half days, dismissing everyone at noon on Friday ahead of religious observances at the end to the week, leaving employees to enjoy a two-and-a-half day weekend.

Which brings us to the topic of this post, the findings of two reduced workweek pilots in Iceland, the results of which were published in English (Going Public: Iceland’s Journey to a Shorter Working Week) this past summer. The result was overwhelmingly positive, with both employees and employers reporting increased productivity and well-being.

1. How is the workweek regulated in Iceland?

The Icelandic labor market has three pillars: laws and regulations set by the government, collective wage agreements, and individual work contracts.

Iceland adopted its 40-hour workweek legislation in 1971, 50 years ago, but according to statistical reports, it was not until 2002 that the actual numbers of hours worked on average was at or below 40 hours.

Similar to its neighboring Nordic countries, Iceland does not have a minimum wage or a nationally set workweek. The Icelandic Act on the 40-hour work week provides that a normal workweek may not exceed 40 hours, but the terms for any specific industry are set by collective agreements, including wages and work and rest time rules, and the hours for a specific employee are set in the individual work contract. There is no minimum wage but working conditions are regulated in the Act on Working Terms and Pension Rights Insurance.

2. Has there been a push for a shorter workweek previously?

Members of the Icelandic Parliament proposed a move to a 35-hour workweek in 2015, but it was voted down. The non-government organization Alda, which was one of the organizations behind the workweek pilot study, has advocated for a shorter workweek since 2011.

3. Why was the pilot study on a reduction in working hours initiated?

When the reduced working hour pilot was proposed it was reported that people living in Iceland spent 90 minutes less a day on leisure activities compared to people living in Denmark and Spain. The trials were conducted as a response to trade unions and civil society efforts to introduce a shorter workweek.

Specifically, the Icelandic National Government trial was announced with the purpose of  determining “whether it [was] possible to shorten working hours [to 36 hours] without wage cuts and achieve mutual benefits for staff and institutions.”

4. How was the study conducted?

Two pilots were conducted by the Reykjavik City Council (2014-2019) and the Icelandic national government (2017-2021). In total more than 2,500 workers (1% of the working population) and more than 60 different workplaces and governmental agencies participated in the pilot, reducing working hours by between one and four hours per week. (Report at 6, 58-60.)

The participating workplaces had to develop qualitative targets to maintain or increase productivity and surveys for tracking employee satisfaction. “Quantitative studies were also routinely conducted by the Reykjavík City Council and the Icelandic government, both as a part of their usual operations and specifically for the trials. These focused mainly on quality of life, stress, satisfaction with work, sick days, and workload among participating workers and the other ‘control’ workplaces, as well as data on their respective ‘performance’ and service provision.” (Report at 31.)

Different industries and work places adopted different solutions to reducing the length of their workdays. For example, staff at public schools adopted rotating schedules where teachers left the school incrementally in relation to the student population and lunches were staggered for the students to reduce the number of staff needed in supervisory roles. In one police station, officers worked staggered week schedules, working shorter hours one week (8 a.m. to 3 p.m. Monday through Thursday and 8 a.m. to 12 p.m. on Fridays) and longer hours the next (8 a.m. to 4 p.m. all five days), reducing the total hours worked by eight hours over a two-week period. (Report at 72f.)

Other measures adopted to shorten the length of the workday included fewer and/or more focused meetings as well as shorter coffee breaks.

5. What was the purpose of the pilot studies?

The purpose of the studies was to increase work-life balance but also to increase productivity.

6. What was the result of the pilot studies?

The outcome of the two pilot studies was considered a success, both among employees and employers, who reported increased productivity and decreased stress and improved work-life balance among employees. (Report at 33.)

Moreover, none of the participant workplaces saw reduced service satisfaction. For example, the Reykjavik City Council and the Directorate of Internal Revenue found no decrease in service satisfaction among patrons compared to before the pilot, despite the reduction in service hours on Fridays. The employees themselves reported providing better service as they were happier with their work-life balance. (Report at 70.)

However, the results were not without challenges, specifically managers were not able to reduce their hours as much as they had hoped, and certain shift workers said it was difficult to manage the handover communication within the allotted reduced hours. (Report at 75.)

7. Did the pilot studies have other impacts too?

Yes, even though workers were happier and more productive, in certain industries, such as public health care, the pilot resulted in the recruitment of additional workers. (Report at 55.)

Other findings of the government survey following the pilot involved a generational divide between older workers who, as a personal preference, considered it important to work long hours versus younger workers who preferred shorter hours. Other benefits associated with a shorter workweek included reduction in traffic congestion, and increased social capital as workers who worked fewer hours volunteered more. It also reduced family life tensions and improved family life, especially for shift workers and single parents.

8. Did Iceland reduced the workweek following the pilot?

Despite the success of the study, the Icelandic law on workweek hours has not been amended and the maximum hours of work is still 40 hours per week. However, the pilot has had an effect on the labor market, with collective agreements now including shorter workweek hours. For example, the Federation of State and Municipal Employees (BSRB) has implemented a shorter workweek for its members, being 36 hours for public employees and 32 hours for shift workers, without cutting pay.

In total, collective agreements from several unions were changed, affecting “170,200 union members from Iceland’s 197,000 strong working population.” (Report at 53.) These members now have either a right to shorter work hours or the right to negotiate shorter working hours. Responding to the changed rules, a member of Parliament representing the Green Party declared in April of 2021, that the next step was to reduce the workweek to 30 hours per week. (Report at 55.)

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