The Dream of the Shorter Workweek
Last Tuesday, Spain’s Council of Ministers approved a bill to reduce the maximum weekly working hours from 40 to 37.5 by the year’s end. This measure highlights our tendency to confuse desires with reality.
Desires are clear. Although Spain’s CIS polling agency hasn’t released public data, private surveys indicate two-thirds of Spaniards support this change, including 85% of Socialist voters and 40% of Popular Party voters. Among Popular Party supporters, opinion splits evenly, explaining the PP's hesitation, once again placed by Moncloa between opposing and echoing the government.
Critics argue only business owners oppose it, facing the same wage bill for fewer hours. True enough, but those bearing costs often grasp consequences best. Initially, the measure raises labor costs: fewer hours at the same pay means a 6.25% wage hike.
Other effects are less clear-cut. They demand thinking beyond immediate gratification, anticipating how others in the economy will react.
Some optimists claim reduced hours boost productivity, benefiting everyone. They confuse cause with consequence. Productivity rises through investment, learning, and improvement—not decrees mandating less work. Nor do the two-thirds favoring shorter hours seem focused on diligence or orderliness. They are unlikely to reduce growing absenteeism once the new schedule kicks in.
Without productivity gains, a BBVA Research report estimated a year ago that labor costs would rise by 1.5% of GDP, shaving annual growth by 0.6 points for two years and employment growth by 0.8 points.
Assuming steady productivity is realistic, given long-standing stagnation in productivity drivers. Recent immigration has not attracted highly skilled profiles, nor has education helped. Despite considerable spending in recent decades, education has mostly extended students' school years.
PISA assessments show Spanish teens finish compulsory schooling poorly prepared, their academic performance flat since 2000. Non-cognitive skills don't fare better: Spanish and Greek students show the greatest decline during tests, signaling poor diligence and persistence.
Adult skills lag similarly. OECD’s PIAAC tests put Spanish adult cognitive skills nearly 20 points (8%) below Germans or Britons, who already work fewer hours. The deficit spans all levels: a Spanish university graduate has fewer skills than a Dutch or Finnish high school graduate.
If education hasn't improved and remains productivity’s foundation, shortening the workweek puts the cart before the horse. We should reconsider how such decisions are made. The fundamental error lies in centralizing decisions politically, rather than through decentralized negotiations adapted to each firm, sector, or individual.
Indeed, many sectors and firms already agree voluntarily on fewer than 40 hours weekly. Voluntary bargaining aligns with preferences, productivity, and working conditions. Collective bargaining mitigates power imbalances, and workers lacking bargaining power are unlikely to enforce legal mandates effectively anyway.
When politics dictates these matters, we misjudge costs and benefits. Future voters see immediate benefits, naïvely imagining every second Friday off or extended vacations, though unlikely. They overlook potential intensified hourly demands, stagnant wages, or higher unemployment risks.
Moreover, many companies may replace workers through capital-intensive technology—AI included—or self-service. These factors already explain much structural unemployment and why, paradoxically, Spain relies heavily on capital-intensive technologies for tasks that, even in richer nations like the US, still employ workers—from refueling cars to parking. This week, social media buzzed about a supermarket chain replacing staff with self-checkouts. Do we really want shorter workweeks to end up doing self-service tasks outside our expertise?
Doubtful. Instead, exercising political rights in ignorance leads to self-harm. Markets might exploit our ignorance, but competition mitigates that risk. Politics also benefits from competition, but we lack incentives to inform ourselves. Gathering political knowledge is costly, and political benefits from informed voting must be shared across society.
Hence, opportunistic politicians capitalize on our ignorance—but don't blame them entirely. As in markets, exploitation happens only when competition fails—especially when rivals are passive, fail to provide alternatives, inform voters, or seize initiative. Sound familiar? Indeed, it's today's opposition, passively waiting its turn. Perhaps it's already working shorter hours. Perhaps we should apply self-service logic to politics itself.