Between 2020 and 2022, 51 per cent of workers in the country had accepted the offer of shorter working hours, including a four-day week, two think tanks found in research published on Friday, saying the figure is likely to be even higher today.
“This study shows a real success story: shorter working hours have become widespread in Iceland … and the economy is strong across a number of indicators,” Gudmundur D Haraldsson, a researcher at Alda, said in a statement.
The trials involved 2500 people — more than 1 per cent of Iceland’s working population at the time — and were aimed at maintaining or increasing productivity while improving work-life balance.
Researchers found that productivity stayed the same or improved in most workplaces, while workers’ wellbeing increased “dramatically” on a range of measures, from perceived stress and burnout to health and work-life balance.
Following the trials, Icelandic trade unions negotiated reductions in working hours for tens of thousands of their members across the country.
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That is much higher than the country’s average growth rate of almost 2 per cent in the decade between 2006 and 2015.
However, the IMF forecasts considerably slower growth in Iceland this year and next.
“Growth is expected to decline … in 2024 on further softening domestic demand and decelerating growth in tourism spending,” the agency said of the tourism-dependent economy in an assessment in July.
Iceland’s low unemployment rate is “a strong indicator of the economy’s vitality”, the Autonomy Institute and Alda also said.
According to the IMF’s World Economic Outlook, that rate stood at 3.4 per cent last year, just over half the average for advanced European economies. The agency expects it to tick up slightly to 3.8 per cent this year and next.