“A 35-hour week would be devastating for the Swedish economy”

A recent proposal that has started to be pushed again in the political debate is the idea of ​​a general statutory shortening of working hours, with the salary maintained. Several trade unions have proposed such a reform and voices are being raised within the Social Democrats to push the issue ahead of the next election.

New calculations from Swedish Business, anchored in current research in the field, show that such a reform would be very costly and threaten both welfare and Swedish competitiveness. Contrary to what is claimed, no more jobs would be created either.

Several European countries have in recent years made attempts with shortened working hours. However, these are not as far-reaching as the proposals being discussed in Sweden. In Belgium, a general right to work four days a week instead of five was introduced in 2022 – but without reducing the number of hours worked. Recently, a selection of municipal employees in Copenhagen were offered to try a four-day week with an unchanged number of hours worked. These reforms therefore do not imply a general shortening of working hours, but rather the possibility of more flexible working hours and longer working days.

In Sweden, a number of municipalities and regions have implemented trials with shorter working hours at a maintained salary. However, the tests have not been carried out for the entire operation, but for individual departments. Most of these attempts have had to be canceled due to runaway costs or staff shortages.

A general shortening of working hours would create major staffing problems in the welfare sector. Sweden’s Municipalities and Regions has calculated that 41,000 people need to be rehired if working hours are reduced by as little as two hours per week for employees with contact occupations in municipalities and regions. The bill for the taxpayers would land at approximately SEK 24 billion.

Shortening of working hours has investigated in 1986, 1987, 1995, 2000 and 2002. From the Norwegian Economic Institute’s opinion to the last-mentioned investigation (SOU 2002:58) it appears that two hours shorter weekly working time would halve the potential growth during the years that the reform is implemented because growth is dependent on the number of hours worked .

There is also no support for the claim that a general shortening of working hours would create more jobs because more people can “share the jobs”. The 2002 investigation stated that there is a lack of support for shorter working hours increasing employment. Recent research confirms this and there are even studies indicating that shorter working hours can lead to reduced employment.

Since the investigation in 2002 however, it has not been described in more detail how the effects of a general shortening of working hours would affect the Swedish economy. In light of this, the Swedish Confederation of Business has developed a new basis for calculations.

We have made the same assumptions as in the investigation, but updated the calculations based on today’s conditions. The result shows that a shortening of the statutory weekly working time from 40 to 35 hours would cause a loss of production of approximately 8 percent.

The decline in production is judged to be slightly less than the decline in working hours, because experience shows that an effect of shorter working hours is that overtime is increased.

Such a dramatic one reduction in production would reduce GDP by as much as SEK 509 billion per year. A reduction in working hours to 30 hours, which is often proposed in the debate, would cost more than twice as much – 1,087 billion every year.

To maintain public activities at today’s level, tax increases would be required.

The effect would be very noticeable, not least in the public sector. In practice, accessibility in Swedish healthcare, elderly care, childcare and school would have to decrease by 8 percent. The same would apply to the defense appropriations, the resources of the judiciary, the investments in infrastructure, and more.

It’s hard to believe that such a drastic deterioration of the public service would be accepted by the citizens. To maintain public activities at today’s level, tax increases would be required.

Given that there is already a major shortage of healthcare workers, teachers and police, the accessibility of welfare and the justice system would deteriorate for the foreseeable future.

A general shortening of working hours would create a shortage of public resources that needs to be filled – before any resources can be invested in improving the service from today’s level. Just to get back to the situation before such a reform, taxes would thus have to be raised sharply.

The costs of the shortening of working hours would not arise overnight, but hit the economy gradually. However, that does not make the situation any less serious.

It is obvious that sharply increased taxes in today’s situation would have dramatic effects for competitiveness, the line of work and Swedish prosperity.

A general shortening of working hours would mean fewer hours worked in a situation where many companies already have major problems with the supply of skills. The companies would risk losing out if future business and investments ended up in other countries.

It should be pointed out that the costs of the reduction in working hours would not occur overnight, but would be reflected in the economy gradually. However, that does not make the situation any less serious. A statutory general reduction in working hours while maintaining wages would be the start of a downward spiral of reduced production, shrinking GDP, reduced welfare and increased taxes.

Sweden has a lot big challenges. We are in the middle of the green transition, we are struggling with a neglected infrastructure and major challenges in welfare. We are finding it increasingly difficult to find the workforce that is needed. Our growth is languishing at the bottom of the EU, while Sweden and the EU are losing competitiveness against the USA and Asia.

In this situation, proposing a general shortening of working hours with maintained pay takes the focus away from the real problems we have. An introduction will damage both welfare and competitiveness. It is simply irresponsible.

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