The unintended consequences of the four-day work week

While a minority of organisations have embraced it, the four-day work week potentially has unintended consequences that are inflationary, reduce productivity, and can lead to employee burnout.

This is according to some experts who recently spoke at the Actuaries Institute 2024 Summit, pointing to several flaws of the 100:80:100 model which some firms operating in finance and insurance have adopted.

The movement, founded by Kiwi entrepreneurs Andrew Barnes and Charlotte Lockhart as 4 Day Week Global, pushes for employees receiving 100% or full pay for 80% of their time and simultaneously maintaining 100% of their output.

Zurich Financial Services non-executive director Elaine Collins said the model can potentially lead to dissatisfaction as there is uncertainty surrounding its long-term sustainability and societal impacts.

"There could be a mismatch between expectations and reality regarding maintaining productivity over a longer period of time with reduced hours," she said, adding that it could lead to lower morale once the novelty wears off.

"Over time, we think that the 100:80:100 model is at risk of becoming an 80:80:100 model with associated inflationary and productivity impacts."

The arrangements could potentially be inflationary in that workers are paid 100% of their remuneration for doing 80% of the work and productivity reduces from 100% to 80%.

Conversely, even if this doesn't occur, Collins argued that the goals will adjust over time. Over the long term, it could also result in more intense workdays and heightened stress levels that potentially cause burnout.

Last year, Labor and Greens backed a recommendation by the Senate work and care committee to trial a four-day work week at full pay.

In 2022, UK fund manager Stellar Asset Management trialled 4 Day Week Global's program and found four key benefits: it improved employee wellbeing, maintained productivity; enhanced recruitment and retention; and fostered innovation. The fund manager ultimately made it a permanent part of their policy.

Collins argued that studies suggesting increased productivity with this model often focus on specific industries or cases where workloads and tasks are easily manageable within shorter hours.

"Does this mean that the goals were always able to be achieved in four days?" she said.

"Whatever the person achieved in five days now needs to be achieved in four days. Does that mean that your lowest-performing people would come in on the fifth day?"