Four Days a Week

The economy is a lot more productive, and we do spend a lot less time collectively on chores like washing clothes and dishes, collecting water. But in most advanced economies, the daily grind, if anything, has become even grindeer. So much for modern technology letting us all spend more time in the garden or at the opera. But that might

all be about to change. In a minute, I'm going to talk about a possible revolution in our work week with one of Bloomberg's most read economic columnist, Noah Smith. I'll also be checking in on the latest on the US trade wars. But first, here's UK Treasury reporter Jes Shankleman to tell us what's been happening in the UK. What if you never went to work on a Friday, not because you're ill or pretending to be, not because you have to look after the kids, or because you're

on vacation. This is the four day week and maybe, just maybe it could be coming to your workplace. The lighting designers Elektra in London. It became a reality at the start of this year when they stopped working Fridays and added an extra hour to Monday through Thursdays. Director Neil Knowles now spends his newly extended weekends perfecting his sour dough bread and visiting galleries. One of his colleagues

has taken up welding. He says output has remained broadly the same, and both his team and his clients are happy with the switch. I think the biggest surprise would be quite how much difference it makes personally it makes. It's not I think I think it's going to make a little bit of difference going from two day weekends to three, but actually it makes an enormous difference, massive

difference in the UK. It's something Jeremy Corbyn's opposition Labor Party is looking at in a bid to kickstart productivity and boost well being. The idea is just one of a series of radical left wing economic policies that increased Corbyn's popularity since the financial crash, an event that caused people to question the fairness of capitalism. Some of his other ideas include nationalizing utilities, giving employees a stake in large companies, and delist businesses from the Stock Exchange if

they don't do enough to tackle climate change. John McDonald, Labor's economic spokesman, who commissioned a review into the idea, I think shorter working weeks will be a vote winner. The influential grassroots socialist group called Momentum wants Labor to adopt a four day week as an official policy in its next manifesto, and with the ruling Conservative Party in turmoil over its failure to deliver on Brexit, a general

election seems perpetually on the horizon. I asked John McDonald recently in Parliament about his latest thoughts on a four day week. It's about making sure that people have a quality of life or work life balance, and it's all levels. And I think the idea of the way in which we can shape the work and week being more flexible about it I think will be incredibly proper. Since the Industrial Revolution, the length of the work week has taken

center stage labor relations. In the eighteen sixties, workers averaged about sixty or seventy hours a week, and that gradually fell to about forty hours a week thanks to improvements in labor laws and technology. Now the question of workers rights is coming back into the spotlight. Part of the reason workers could be left behind amid greater automation and use of technology. The consultancy McKinsey estimates of all hours

work today could be automated using already existing technologies. The Trade Union Congress an umbrella group for unions once workers as well as companies to reap the benefits of enhanced productivity from robots. The group says the march of technology so far seems to have increased hours rather than cutting them back, so employers increasingly expect people to log on all times of the day and as a result, it says, British workers currently rack up t two billion pounds of

unpaid overtime or about forty billion dollars. Here's the Trade Union Congress is Kate Bell. We're calling for shorter working time with no loss of pay. But I think it is important to remember the context we're talking about this in. You know, we're hearing all these kind of promises about new technology. You know that it's going to give a significant boost to our GDP. We've got people like Jeff Beesl saying that he's got so much money the only thing he can think to do with it is to

put a man on the moon. You know, we are talking about the possibility of getting richer and what we know has happened historically over kind of you know, in the last Industrial Revolution was when trade unions fought for it, we were able to deliver higher pay and shorter working time.

So that's very much our goal. Labor asked Robert Skidelski, an economist at the University of Warwick best known for his biography of John Maynard Kines, to study if and how the government could cut the working week, and his report is set to be published in July. He doesn't think capping working hours across the economy is the answer, as France's plural Left party did at the turn of the century. Instead, he says the UK government should set

an example. As an employer he found investing in automation and improving flexibility in the civil service, health service and schools could be a starting point. By now. Skidelski says people in Britain should be working about thirty two or thirty three hours a week, but actually those hours stopped falling in the nineteen eighties, So does that mean a

more drastic approach from politicians could hold the key? The question to to raise is what are the most effective forms of government intervention in order to move the whole economy to you to increase the denicity of automation, Well, the government can do something in the public sector. It's the employer and it's got a workforce, and you know there are there are seven million, seven million public public sector employees. It's about twenty five percent of the workforce.

You can start doing something there. Don't start planning your long weekends quite yet, though. He's keen to avoid the trap of using the term four day week and says we need to think about shorter working hours overall. So that could mean a parent working smarter than leaving at three in the afternoon so they can pick up their children from school, not just everyone having Fridays off and

the economy virtually shutting down. You've got to organize in such a way, and I know it's difficult, and it may be, it may be that there are cost to this. You've got organized in such a way that the service isn't interrupted because people aren't people aren't at at work.

And key to making all of this work is increased investment in technologies that can do monotony us and repetitive tasks, freeing people up to spend more time on innovation and creative thinking that might help boost productivity in Britain, where the metric is among the worst in Europe, the average American worker gets as much done by Thursday afternoon as

their British counterpart currently does in an entire week. According to the International Monetary Fund, The nation also has the lowest use of robots in manufacturing of any G ten country. But despite promises for getting a better work life balance, shorter working hours don't necessarily boost the economy. The UK's biggest business lobby group, the Confederation of British Industry, isn't convinced a rigid reduction in ours will help productivity or

works well being. Rain Newton Smith for c b i S chief economist, said forcing everyone to move to compressed ours could make it harder for people to have the work life balance they want or need. Back at Electra, the lighting design company, Neil Knowles says the decision to shift to a four day week wasn't easy. It does mean, as the CBI says, less flexibility on the days they are at work. So there's a lot of sorting out when we started it, which we kind of started in

about January February this year. A lot of discussion on things and a lot of kind of agreement on things. For example, that we don't let people take time off to get deliveries, which I used to used to be fairly small. We're kind of flexible that people say, I'm getting a washing machine delivered kind of coming two hours later. The answer is now, no, you can't do it on Friday. You want to go to the dentist to do it

on Friday. And while it might work for their small company, four day weeks may not be so easy to implement in a ret staunt or a shop. He says. The answer would be it works for consumpcy companies where you've got an output you're charging for, but if you're charging for your time rather than for your services. It's not going to work for you. Yeah, so works for the professional classes, which is nice for us, isn't it for

Bloomberg News. I'm Josh equl Well. I'm was quite happy to have that segment because it reminds listeners that there are some people who are occasionally getting to talk about things other than Brexit in the UK. But the idea of a four day week and having more flexibility around working patterns is also something you hear a lot in the US, and I wanted to talk about the economics of it and the possible implications of all that with one of our most read economic columnists, Noah Smith. Um. No, uh,

You've written a bit about issues related to this. I mean, do you think it's the future that more companies will move to a four day week or some version of that. You know, it's a really good question. I think that what you've seen in European countries that have sort of forced their people to take lots of vacation, you've seen a rise in productivity per hour, which makes sense because number one, you need to get more stuff done within

the small time allotted. Number Two, you're just more sort of alert the question is whether a four day work week is actually the right way to accomplish that, or whether it would be better to do sort of shorter working days across the work week, because you know, I liken it to um, you know, full year school versus

year round school. I think that the United States has very long summer vacations in school and sometimes, yeah, there's research showing this is bad and basically people start forgetting. So there's a question of will constant three day weekends cause people to you sort of get out of the rhythm of working and really hate coming back to work on Monday. Um, would it be better to simply have shorter working days and more you know, sort of vacation days out of the year. And I think that's a

debate that people are going to have. Another possibility is to have a four day work week but have only a two day weekend and then another off day in the middle of the week. So that's another model people

can experiment with. And I think people are going to experiment with these models because we haven't seen much of a hit to GDP per person from you know, sort of shorter work weeks over the years, and and I think people are realizing that it can boost productivity to how does that sound, Well, there's some of the people who are being who are earning the most we know, are also the people who are doing the longest hours.

So somehow it doesn't always um work out. People don't seem to make that choice, or at least they're they're choosing jobs that have um, that have the money, and then they're not able to sort of trade the money

against hours. But it does sound like you think there is a kind of economic free lunch somewhere here, whether it's a four day week or shorter hours that you could have uh quite dramatic changes to our sort of nine to five, five day a week culture, or even the bit the longer hours that lots of us have got used to working without having a significant hit to the economy and maybe making people happier into the bargain.

That's absolutely right. You know, the key to getting a free lunch is to stop throwing away your lunch, always say, and you know, I've I've studied Japan a bit and lived there, and it's almost certainly true that Japanese people at many many companies work much longer than's necessary for productivity and The reason that they do is because of you know, essentially poor management. Management doesn't know how to evaluate their work output, so instead it simply evaluates their

work inputs. So staying there at your computer till late at night doing essentially useless busy work is counted as work when in fact nothing is getting done because that's the only way that managers know how to monitor it. And so the Japanese government has been trying to crack down that. The question is where a country falls along spectrum.

I mean, obviously, if you enforce a one day work week, then nobody's going to be able to get their work done, and companies are going to have big problems because they're going to have to hire many more people to do tiny, fragmented days of work, and there's going to be just mass confusion and chaos and unproductivity. So there's there's a happy medium in there in each country, and to a

certain extent, each company really has to find it. We have these mechanisms that push against finding that happy medium because everybody wants to look good for the boss. You know, everyone wants to look like they're putting in a lot of hours, especially when there's a recession. Or weak economy. People don't want to be the first to get fired, so they're all sort of competing with each other to look like they're putting in the you know, they're they're

burning the midnight oil. And so I think, you know, it does take government to sort of, you know, push against these things. One other possible plan that I didn't mention is to to go to a four day work week temporarily during recessions to encourage companies to retain staff and encourage them not to do layoffs, because layoffs are very damaging instructive, and that does happen in Germany really well.

Places where you have closer relationships between the unions and the particular factories or the companies, you can often have shared limited limiting of hours in exchange for holding onto more more people. That's been over the years, that's been something that unions have negotiated. One of the reasons why sometimes you feel like unions can actually play a positive

role as as well as sometimes a negative one. But it sounds I mean, so you actually think the government could sort of play a positive nudge role here and help people to solutions that the market wouldn't necessarily lead to. Well, I definitely do. But you know, there's a caution, which

is that, you know, the hammer and nail problem. When all you've got as a hammer, everything looks like a nail, and there's the possibility that sort of over zealous bureaucrats will simply say, Okay, well, you know, because this works sometimes, it works all the time, and we should just restrict people from working as much as possible. And I think that very quickly degenerates into this this negative, one size fits all solution that would then end up, you know,

hurting more than it helps. The other The other problem is ideology. If you have a government that's ideologically committed to the idea of of you know, forcing people to work less work is bad, we should lead lives of leisure,

or simply the more rules we can make, the better. Well, then that's a danger too, and that's you know, I certainly worry about this in the context of Bernie Sanders and and some of his allied people in the United States, and I don't know as much about Corbin in the UK, but I'd say you might want to think about is this move being done for ideological reasons, or you know,

is it really being done for practice. If there's an interesting form here because the Labor when the Labor Party came in in the seventies, they created the May Day Bank holiday in the UK, which previously we've had across Europe but not in the UK. So there's a sense of which they're also just trying to recreate the idea

of giving everyone a holiday. Um, but I think there is also there's a kind of I've seen some work by unions, but also some academics on both sides of the Atlantic which talks about this in a slightly different way and says we should see it as a potential opportunity for workers to have more of the benefits of the coming automation revolution. So instead of just a chunk of workers losing their jobs because everything is more efficient and automated, and shareholders doing very well out of the

extra profits for companies, this is how they would put it. Instead, you have all workers do less work and they're still able to be paid the same because of that. If you like automation dividend, does any is any of that coherent? Do you think from ancon economist standpoint that idea and of course I immediately think it sounds great in principle, but how would it work on a kind of company to company level? But sort of if you're taking a very macro view, is that a coherent thing to think about?

So I think that you have to look at it in terms of productivity and not in terms of automation. The thinking about it in terms of automation will get you in trouble because automation is difficult to measure and even more difficult to produce. In other words, suppose that automation comes in and drives a lot of people's wages down because suddenly the technology is substituting for people instead

of complementing them. Then no wages are going down. And then you're asking, okay, so wages went down, should we actually make people work fewer hours? Well that's a double whammy, right, Your wages went down and you can't work as much.

But if you look at it through a productivity lens, you say, okay, would making those people work less actually increase their productivity, which would increase their wages and partially counteract the effect of automation, So they could be doing fewer hours for the same productivity and the same wages. I guess that's the model. Well, right, I'm saying that if you if you don't increase for our productivity and you restrict hours, if people are paid by the hour,

you're reducing pay. Only if people are paid to sort of a fixed monthly or weekly salary, will that maintain their incomes for less work. You've also got to think about how these people are getting paid and what what the pay structure is there. As for you know, automation,

there's the question of what automation will do. If automation starts actually reducing aggregate employment and there's a whole bunch of people who are just unemployed in the street, well then you might want to cut people's hours or days of work just to force companies to sort of overstaff. You hire hire two people to do the job you'd hire one person to do before, and if you want

to keep everybody in work. And of course then there's also the answer question of do we actually want work to be the model going forward of who deserves what in a society. Do we want to go to a universal basic income where people get paid just for being themselves, or do we want to sort of stick with the traditional industrial age model of those who do not work neither shall they eat. I think that's a biblical quote and a quote from the Soviet Constitution, so well, I

think it's it's a reminder. It is like we've almost come back to some of the issues that that John Maynard Kane's mentioned in the essay that I mentioned at the beginning of the podcast, which was thinking about how the world would change when where we've had all this increase in productivity and he felt we just wouldn't need

to work very much. You know, all of these debates about automation and the future structure of the economy do make us think about the place of work in our lives as well as wages, although I think we're probably still pretty focused on them too. Noah Smith, thank you very much. I hope we get you on the podcast again. We we've we've enjoyed that, We've enjoyed having you, and

we'll continue debating. Thank you very much. I really appreciate you having the Well, it wouldn't be Stephanomics without some more breaking news on trade wars. Donald Trump opened a whole new front in his trade wars in the last week, this time against Mexico or Mexico. Economy reporter Eric Martin was on his way. He was on a plane from Mexico City to New York when the news broke. Eric,

What on earth has happened, Stephanie. It's been fascinating, really astonishing turn of events last Thursday with this teriff threat. Now that tariffs don't actually go into effect until next Monday, June tenth. So what's happening now is Mexico has a delegation of the highest level in Washington meeting with the US Trade representative, with Agriculture, with Department of Commerce, with Homeland Security, trying to convince them to get the President

not to actually follow through with this teriff threat. Just remind us what he said sort out of the blue. Well, the President on Thursday afternoon said that he plans to impose a tariff beginning at five percent next week, in ratcheting up to twenty five percent by October. A less Mexico does more to stop undocumented immigration to the US. Now, this issue has been a thorn in the side of

the president for years. It's been an irritant something that he mentioned even in his campaign launched speech in But this is one of the first times we're seeing a very clear linking of the trade in immigration issues. And you're normally you're in the US at the moment, but you're normally sitting in Mexico City. How has this gone down in Mexico. Well, it's been an absolute bombshell. Uh. Mexico had just sent the updated naft and after two point oh the U s m c A to its

Senate for debate and ratification. And in fact, the Deputy Minister of Foreign Relations for North America was already scheduled to speak to the press in what was supposed to be a celebratory event about this document, this treaty having been sent to lawmakers. Complete change of plans with the president's tweet. This came out of nowhere. Mexico was not expecting this, There was no warning. We saw a significant drop off in the selloff in the peso on Friday,

the currency at its worst day since October. Just a really remarkable turn of events. And what does this mean for the US Mexico Canada trade agreement that we're not allowed to say is just like NAFTA. Well, it certainly poisons the well. Uh, this was an agreement that Mexico was not thrilled about. There was a defense of the

gains that Mexico had through NAFTA. So there was already some concern about the agreement or thinking that this is not the ideal scenario, but trying to protect the advantages one through the NAFTA process in the early nine nineties. This certainly poisons the well and makes it much harder for Mexico and for Canada, and frankly for the US

to go forward with Trump's agreement. There was already significant US opposition among Democrats in the House and the idea that they would give the president of victory a political victory by being able to say that he fixed NAFTA the problems the first and after at a time when he's putting taxes on Mexico. In what one analyst said is it's really like taxing Texas. I mean, Mexico is

so integrated with the US economy. People refer to it in a kind of facetious way, but as the fifty first state economically, and you know, to be putting these kind of levies on an economy that has so much integrated production with the US, to most economist makes no sense. And I guess if you're looking from the outside and maybe even not not sitting in the US, but sitting in Europe or even China. You know, what does this

tell us about President Trump's attitude to trade wars? You know, there was a time when we thought he'd be very keen to He's keen to have a deal, and he just wanted a deal, even if it wasn't necessarily a good deal. That seems to have changed certainly with regard to China over the last few months. He seems to be a bit nervous of doing a deal that would then maybe played badly on the political campaign trail moving

onto to the next year's election. Does this tell us that he's just he doesn't mind how many fronts he opens a trade war on, or do you think this is a specific short term play for Mexico. Well, absolutely worsens the outlook for a deal with China. That if Trump is capable of withdrawing from essentially this is a de facto withdrawal from NAFTA, at least on a short term basis, to be putting five percent tariffs up to against a partner with whom he has an existing free

trade agreement. So the idea that if he's capable of doing this with one of America's closest commercial allies. He's capable of anything in terms of going back on his word or good faith agreements with Europe or with China down the line. So a lot of people looking at

the signal that this sends. And even if this happens in the short term, which is what most economists who Bloomberg spoke with expect, even if this only happens for a period of months, or tariff's only rise to ten percent, could have a significant impact on the Mexican economy, potentially put an already weak Mexican economy into recession. And that's counter to what President Trump wants in terms of the migration pattern that so much immigration has been coming from

Central America. Mexico has not been the problem on undocumented immigration in recent years. But if the economy goes into recession, that increases the impulse or the allure of the US economy, the US labor market for Mexican workers looking for a livelihood.

And I guess we should say I mean, there's a lot of things that President Trump does where there's an outrage that he's not playing by the rules, and he's saying things that people in the past haven't said, and then sometimes in retrospect we say, you know what, he shaped things up, and actually he revealed that some things were possible that we didn't think we're possible. Is there

any chance that this could fall into that category? And actually you would see a significant change in illegal immigration into the US from Mexico as a result of this. Well, the concern along analysts is that we've already seen uh tens of thousands of undocumented immigrants arriving to the US in the current year. And the idea that if the US, the world's biggest economy, one of the wealthiest countries in the world, could not stop illegal immigration, what is to

make one think that Mexico will be able to achieve that. Well, it's really nice to have the perspective of someone sitting in the US, but also with such good insight into what's happening in Mexico. Eric Martin, thanks very much, Thank you, Stephanie, thanks for listening to Stephanomics. We'll be back next week with more on the ground insights into the global economy. In the meantime, you can find us on the Bloomberg

Terminal website, app or wherever you get your podcasts. We'd love it if you took the time to rate and review our shows so you can reach more listeners. And for more news and analysis from Bloomberg Economics, follow at Economics on Twitter. It's that's simple. You can also find me on at my Stephanomics. The story in this episode was reported and written by Lucy Meekin and jess Shanklman, was produced by Magnus Hendrickson and edited by Scott Lanman,

who is also the executive producer of Stephanomics. Be sure to read Lucy and Jessica's article on this topic, which was edited by Brian Swint. Special thanks to Noah Smith and Eric Martin. Francesco Levy is the head of Bloomberg Podcasts.