The dilemma of the 37.5-hour day: more conciliation and productivity, but also more business costs and salary adjustments

The coalition agreement between PSOE and Sumar to form a hypothetical Government has put the debate on the length of the working day in Spain in focus. The star proposal of both groups is to legally reduce the weekly work week from the current limit of 40 hours to 37.5 in two years without losing salary.. A cause that the unions and the second vice president, Yolanda Díaz, have promoted with special zeal.. As happened with other star measures of the previous legislature – see the labor reform or the increases in the minimum wage – the controversy has not taken long to arise.

On the one hand, advocates of working fewer hours point out that doing so would improve the work-life balance of millions of workers and has the potential to revolutionize the country's productivity.. On the other hand, those who view it with more suspicion warn that the measure would increase companies' labor costs and point out that not all companies would have an easy time adjusting to the new reality.

“For the workers it is indisputable that it is a step forward in working conditions. The quality of work depends on many things, among them, the reconciliation of personal and family life,” says Raül Segarra, a statistician specialized in the labor market.. “The trend, whether looked at in historical terms or between countries, is to work fewer and fewer hours,” adds Carlos Victoria, professor at the Complutense University of Madrid and consultant specialized in employment and social protection. Among the most notable precedents for reducing working hours is that of France, which reduced its work week from 39 to 35 hours in 2000.

The unions see it along the same lines.. The general secretary of CC OO, Unai Sordo, said on Tuesday that reducing working time will help create jobs and improve the productivity of companies. For his part, the leader of UGT, Pepe Álvarez, defended that reducing the working day is “perfectly acceptable” given the productivity increases expected for the Spanish economy in the coming years.

The productivity argument would happen because companies were capable of reorganizing themselves to produce the same thing, but with fewer hours of work invested.. A change in business dynamics that would not be easy in sectors where presence is essential, as is the case with construction, hospitality or commerce, reflects Raül Segarra.. “In this type of work, reducing the working day implies, without a doubt, an increase in costs for companies. In the end the hour worked becomes more expensive, therefore, you need more staff,” he points out.

However, although higher labor costs in these sectors could have negative repercussions on employment, they could also encourage companies to invest in higher quality jobs, argues Segarra.. This would end up improving the productivity of the Spanish economy, which is clearly below the average of the euro countries.

More costs for companies

However, reducing the length of the weekly working day while maintaining salaries could also have adverse effects on the economy.. Firstly, because it would increase the labor costs of companies, which have grown considerably in some sectors in recent years following increases in the minimum wage or the increase in social contributions introduced by the pension reform. And if labor costs rise, employment could suffer. “There will be activities where costs will increase and, without compensation, this could have some impact on secure employment,” says Marcel Jansen, a researcher at Fedea.

Another relevant issue is that, although the measure is designed so that workers do not lose wages, the Government will have a difficult time preventing companies from adjusting salaries, even if it is through other means.. For example, offering lower salaries to new hires or limiting raises. “In sectors and occupations where currently the agreed hours are close to 40, I assume that the measure will lead to lower salary growth in the coming years,” says Jansen.

Furthermore, Jansen believes that reducing the maximum working day by legal means and for everyone equally, ignores the very heterogeneous context that exists in the Spanish economy.. “There are many different situations, occupations, sectors and company sizes. The normal place to agree on this, in principle, would be collective bargaining, where shorter working hours can be agreed upon,” says the researcher.

Another criticism leveled at the PSOE and Sumar proposal is that reductions in working hours are usually due to improvements in productivity and not the other way around. “When we get richer, for every hour we work we earn more money and precisely because of that we can give up working so much,” exemplifies Carlos Victoria.

Finally, Marcel Jansen wonders if reducing the working day should be the priority in an economy with the unemployment and underemployment rates that Spain has.. “Personally, I think it's phenomenal that there are steps to facilitate conciliation, that someone works less than 40 hours. But my concern is that Spain's unemployment rate is double the European average and many people work fewer hours than they want.. “All the meat on the grill should be on reducing the unemployment rate,” he says.

More than 8.4 million workers benefited

A reduction in working hours like the one proposed by PSOE and Sumar will directly affect more than 8.4 million workers. This is the number of employees currently protected by collective agreements in which weekly working hours exceed 37.5, according to statistics provided by the Ministry of Labor. However, the potential scope of the reduction is greater: in Spain there were 17.2 million employees last year, according to the Active Population Survey (EPA).

In fact, although the maximum legal working day is 40 hours per week (up to a maximum of 1,826 hours per year), the majority of employees now work fewer hours.. The average agreed upon in the agreements in force in September 2023 is 38.4 hours, but other sources such as the Eurostat workforce survey place the real average working day of Spaniards at 37.7 hours per week.

Even so, Spain is, of the large economies of the EU, the country in which the most hours are actually worked per week. The 37.7 hours per week that Spanish employees work, on average, are above the 37.3 in Italy; 37.2 in France; 36.6 on average in the eurozone, or 35.2 in Germany. The idea is that by lowering the legal maximum weekly working hours, the actual hours will also be reduced.