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Iceland Adopts 36-Hour Workweek Without Salary Cuts; Experience Improves Workers’ Well-Being and Maintains Economic Growth.
In 2019, Iceland took a bold step by testing a shorter workweek, reducing weekly hours without cutting salaries.
In Reykjavík, the capital of Iceland, the scene on a Friday afternoon is different from what is typical in large cities. Instead of heavy traffic, it is common to see packed cafes and quiet streets.
For many Icelandic workers, the workday has already ended. This is because the country has adopted a reduction in the weekly work hours, from 40 to 36 hours without salary cuts.
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The change was implemented for nearly 90% of the country’s workforce. Some professionals concentrate their hours into four days and take one off, while others simply shorten Friday.
The most important part: the change has been successful.
Positive Outcomes in Well-Being and the Economy
According to Gudmundur D. Haraldsson, researcher at the organization Alda, the experience is regarded as a success. “Shorter work hours have become common in Iceland… and the economy is strong on various indicators,” he stated in a statement.
The traditional five-day workweek of 40 hours emerged in the 20th century in response to pressure from unions.
The model was not created with a focus on social well-being, but as a limit to the harsh six-day workweeks in factories.
One of the first entrepreneurs to adopt this new logic was Henry Ford in 1926. He instituted a five-day workweek without reducing salaries and achieved good results.
Over time, it became clear that working more does not always mean producing more. Fatigue, stress, and loss of focus diminish performance. Studies indicate that reducing hours can improve health without significant losses in productivity.
National Test Started with Public Servants
In Iceland, the proposal to reduce working hours started modestly. Between 2015 and 2019, tests were conducted with 2,500 public servants — about 1% of the workforce.
These were professionals from schools, hospitals, social services, and offices. They transitioned from 40-hour weeks to 35 or 36, without salary reduction.
The result? Stress and burnout decreased. Requests for medical leave dropped. Workers reported better health and well-being. Meanwhile, productivity remained stable or improved.
The numbers led unions to push for changes in labor contracts. They wanted to extend the proposal to the entire working-age population.
The pressure worked. Today, almost 90% of Icelandic workers enjoy shorter hours.
A Shorter and More Flexible Workweek
Although the term “four-day week” is often used, Iceland’s model is more flexible. Many workers prefer to continue with five workdays but with shorter hours. Others opt for biweekly days off or a half-day free each week.
This flexibility was deemed essential for the success of the proposal. Rather than imposing a single model, each sector or company adjusted the new rules to their routines. This facilitated acceptance and adaptation among teams.
But what about the economy? How does the reduction in hours affect macroeconomic indicators?
Economic Growth Remains Strong
According to the World Economic Outlook 2024 from the International Monetary Fund (IMF), Iceland experienced a 5% growth in 2023.
It was one of the largest advances among advanced European countries, trailing only Malta. Unemployment stood at 3.4%, well below the European average.
So far, there are no signs that the change in working hours has harmed the economy. Even with fewer work hours, the country maintains solid growth and low unemployment rates.
A Personal Experience from a Teacher
Teacher María Hjálmtýsdóttir, from Kópavogur, is one of those who noticed changes in her daily life.
Her husband, Tumi, works in a government agency. Now, he takes two Fridays off each month to rest. On those days off, he sleeps more, takes care of the house, and picks their son up from school.
María shares that, as she is usually the one who picks their son up on other days, those Friday afternoons have become free for her to engage in activities she enjoys.
She takes the time to chat with friends, devote herself to volunteering, or simply relax by the pool. For a tired teacher, this extra time has made a difference.
The Model is Inspiring Other Countries
Iceland has a small and cohesive population. This makes testing and changes easier. But local success has influenced other countries. The idea of a shorter week is gaining traction in different parts of the world.
In the United Kingdom, 61 companies participated in a trial in 2022. The sectors were varied, from marketing to restaurants.
Employees worked fewer hours without salary cuts. More than 90% of companies decided to keep the new model after the testing phase ended. Productivity did not decrease, stress levels dropped, and employees became more motivated.
In Spain, the government launched a pilot project in 2021. The goal was to help small businesses test shorter weeks with financial support.
Initial reports indicate improvements in workplace atmosphere and stable production.
Even in Japan, a country known for its long hours, changes are underway. Microsoft Japan tested a four-day week in 2019.
The outcome was surprising: productivity increased by 40%. Energy consumption fell nearly 25%, and paper printing was reduced by 60%. The company considered the experiment a success.
Bélgica and the United States also conducted their own tests. Generally, results were positive. Productivity did not drop and, in many cases, increased. Workers’ well-being improved, and turnover decreased.
Working Less Can Mean Producing Better
Each country has its own economic and cultural realities. What works in Iceland may not work everywhere. But results point to a common pattern: working less does not mean working worse.
With less stress and more time to rest, employees feel better. They become more focused, motivated, and engaged.
This directly impacts results. Companies that adopted the reduced hours noticed improvements in overall team performance.
Trust and Negotiation Were Essential
The Icelandic model was made possible by the trust between workers, businesses, and the government. The role of unions was also important, as they pushed for fairer contracts.
Collective bargaining helped ensure that the benefits were applied on a large scale.
Flexibility was also decisive. By allowing different formats for reductions, Iceland was able to tailor the proposal to the realities of each sector.
The Icelandic experience shows that it is possible to rethink work organization. Without harming the economy and with a positive impact on quality of life.
The results obtained so far indicate that the model can work in other parts of the world. It is essential to consider local particularities and apply it responsibly.
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