ifo President Fuest Speaks Out against Four-Day Week
ifo President Clemens Fuest has spoken out against the four-day week with full wage compensation. Cutting working hours by one-fifth while keeping monthly wages unchanged would be equivalent to raising hourly wages by 25%. “For companies, this would be financially viable only if the productivity of employees were to increase by the same amount – in other words if they were to accomplish in four days what they currently do in five,” Fuest writes in ifo Viewpoint 249. Productivity may increase if people work shorter hours, but not by this amount.
Moreover, Fuest writes, in an economy like Germany’s, where the workforce is becoming increasingly scarce due to demographic change, it seems absurd to also shorten working hours. Rather, policymakers and collective bargaining partners should shape the conditions in such a way as to strengthen incentives for labor supply. “This includes ensuring that the basic income promotes part-time work less and full-time work more. It also includes further expanding childcare, reforming the taxation of spouses, and limiting public spending so that there is scope to reduce taxes and contributions on wages. Last but not least, labor shortages can also be alleviated through higher wages.”
