Why the changing work-life balance spells bad news for Britain
Tim Wallace
5 min read
Working Less Economy
Rachel Watkyn has had a front row seat for the extraordinary economic ructions of the past few years.
The founder of The Tiny Box Company endured the deep lows of the early weeks of the pandemic when orders ground to a halt, then a boom when she landed contracts supplying packaging to the suppliers of Covid tests.
She hired more staff to meet demand during lockdown’s online shopping boom, then suffered a crunch when restrictions ended and people going to pubs and restaurants again instead of buying lots of goods that required packaging services.
“Sales plummeted,” she says.
Watkyn could have laid off staff but a tight labour market and soaring pay deals made her wary. If she made people redundant, could she afford to hire extra staff if business picked up?
Instead, Watkyn got creative at her factory in Cornwall and distribution centre in Sussex.
“We cut everybody’s working week from 40 hours to 37 and a half, with a 2.5pc increase in pay,” she says.
The Tiny Box Company is not alone. Across the economy as a whole, the typical full time worker puts in around 45 minutes less per week now than they did in 2019.
It might not sound like much but if every worker in the country put in that extra time each week, it would amount to the equivalent of hundreds of thousands more full-time staff.
The decline in average hours worked per week represents a significant loss to an already weak economy.
Watkyn says her workers have become more productive.
“What we suspected was that it would make no difference to production – and it didn’t.”
However, most Britons have not. Output per hour worked across the economy was just 0.1pc higher in the first quarter of this year than it was on the eve of the pandemic.
The biggest drop in hours, according to the Office for National Statistics, has been in the hospitality industry. In this sector the average worker, including full-time and part-time staff, puts in three hours less per week than they used to.
Kate Nicholls, chief executive of UK Hospitality, says this is partly a result of the changing structure of the workforce.
“We have found that the non-UK workers who were in hospitality before Covid tended to work longer hours. They would tend to work a full-time job, and UK workers often work shifts or split shifts, and shorter hours.”
A fall in the number of foreign staff in the sector since the pandemic has resulted in a drop in average hours overall.
Fewer hours worked in the hospitality industry have a direct impact on profits and productivity: shorter opening hours for pubs, bars and restaurants often simply means fewer drinks and meals sold.
It is not just hospitality that is driving this epidemic of under-employment. Tony Wilson, at the Institute for Employment Studies, notes there has been a big drop in self-employment. Those who work for themselves often put in long shifts – a move to more conventional work gives many less incentive to burn the midnight oil.
This is not only a British phenomenon.
Average hours across the eurozone have fallen by 2.2pc compared to pre-pandemic levels.
Bert Colijn, an economist at ING, estimates the cumulative impact is equivalent to the loss of 3.8 million workers – a big enough hit to explain some of the wage pressures and inflation battering the eurozone.
He believes Watkyn’s experience is typical: companies appear to be “hoarding” workers when in the past they might have let them go.
At the same time, more youngsters have entered work and more women have moved into full-time employment – potentially pulling down the average number of hours as a result of the different typical working patterns of these two groups. An increase in sick leave has pulled down hours too.
One theory as to why we are now collectively working less is that it is a legacy of Covid: people have realised life is precious and want a more relaxed work-life balance.
The biggest ever trial of a four-day week was launched in Britain last year, with more than 60 companies introducing the policy for six months. Staff receive the same amount of pay but get an extra day to themselves.
The hope was that happier workers would be more productive, effectively producing the same amount of output in less time.
Wilson says it is not quite that straightforward: “The argument for a four-day week, that inherently working fewer hours in and of itself leads to higher productivity, I don’t think is particularly borne out by any evidence.
“It is more that if people are getting a better fit between the hours they want and the hours they get, they should be more productive.”
Almost a third of Britons – more than 10 million people – want to work fewer hours, according to the ONS. Within this group, a third would take a pay cut to work less.
When jobs website CV-Library asked 2,000 workers what is most important to them, 60pc said “my happiness and a better work life balance”. Barely one-in-five chose “money to support my lifestyle choices” and just 18pc said “having a successful career”.
Neil Carberry, chief executive of the Recruitment and Employment Confederation, says more companies are offering nine-day fortnights, or trialling four-day weeks as bosses experiment with hybrid working patterns.
“Firms are also trying to entice people back into the office. If they turn round and say to a member of staff, ‘I want you in London three days a week’, then the possible give is, ‘we will move to a nine-day fortnight’,” he says.
It is too early to say the long-term economic impact of this shift. However, a move to working fewer hours will do little to help Britain’s anaemic growth.
At The Tiny Box Company, Watkyn is working out how to get extra staff in for the Christmas rush.
“We’ve got a Whatsapp group of casual workers – lots of them are mums or dads who want something to fit in between school runs or can only work a few days,” says Watkyn.
“We are having to learn to be a lot more flexible.”
