Reduced working hours "can cost hundreds of billions"

The proposal to reduce working hours to 35 hours a week would cost "hundreds of billions of kronor" per year, according to national economist John Hassler at Stockholm University. The question is whether we think it's worth it?

» Updated: September 19 2024

» Published: August 09 2024

Reduced working hours "can cost hundreds of billions"
Photo: Anders Wiklund/TT

A working group within the Social Democratic Party wants to reduce the full-time workweek from 40 to 35 hours per week.

John Hassler, who is a professor of economics at the Institute for International Economics at Stockholm University, says that reduced working hours are part of a historical trend in line with increased productivity.

In that sense, there is something natural and reasonable about the proposal, but it depends on us becoming richer and earning more in the future, says Hassler, who previously was the chairman of the Fiscal Policy Council.

He emphasizes that it is not self-evident that legislation is part of the historical trend.

I tend to believe that it is still quite important to let individual industries and individuals have significant influence over how much they should work.

"The starting point is that it costs"

The cost of reduced income due to reduced working hours is around 60 billion kronor per percentage point fewer working hours. Hassler explains that it is difficult to give an exact figure on how many billions a reduction of full-time work to 35 hours costs, since not everyone works full-time, but that it is at least "hundreds of billions of kronor per year".

The starting point is that it costs. If you work less, you get lower income. If you want to maintain the service level in the public sector, you need more people working there. Then the question is whether we think it's worth it?

Wages must rise

Is it worth it?

It's not up to an economist to answer. It must be based on what people's preferences are, how important they think it is to get more consumption space versus getting more leisure time.

A reduction of working hours could lead to an increased shortage of labor in occupations that already have difficulty recruiting personnel, according to Hassler.

It's clear that the shortage problem is accentuated, especially if you go ahead in the public sector and in areas where there is already a shortage of skills today. In the long run, it's manageable, but the challenges become greater.

He highlights improved employment conditions and education as methods to address the problem.

According to the traditional economic recipe, wages must rise where there are shortage occupations.

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By TTThis article has been altered and translated by Sweden Herald

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