The economic impact of reduced working hours in Austria
EcoAustria study - Economic impact of a reduction in working hours
Mag. Ludwig Strohner
Head of the Public Finance Research Section
DI Johannes Berger
Head of the Labour Market and Social Security Research Section
Due to rising unemployment and the expansion of short-time working in times of the COVID-19 crisis, the goal of a four-day working week has become increasingly important. EcoAustria has analyzed and evaluated the economic impact of such a reduction in working hours for Austria.
A reduction in normal weekly working hours from 40 to 32 hours was assumed. In the course of the analysis, various scenarios were compared with each other and the usefulness of wage compensation was assessed. In the scenarios that do not provide for explicit wage compensation, the model simulations show a thoroughly positive impact of the reduction in working hours in terms of employment. Specifically, the number of employees in this observation is around 1.2 percent higher than in the baseline scenario and the unemployment rate would fall by around one percentage point. However, this employment effect cannot compensate for the reduction in working hours and real GDP in this scenario would be around 5% lower than in the baseline scenario. Private consumption would also fall due to disposable income.
In the event of wage compensation in the form of higher hourly wages, rising unit labor costs would further impair the quality of the location. Accordingly, wage compensation is associated with a rise in prices and a reduction in companies' demand for employment. This would have a particularly negative impact on the return on capital and investments. According to the Institute's analysis, a reduction in working hours to 32 hours per week in combination with wage compensation would reduce real GDP by around 7 percent in the short and medium term.
In the case of a one-third regulation, one third of the costs would be borne by companies through higher hourly wages, one third by employees in the form of lower incomes and one third by the public sector through a reduction in non-wage labor costs. In this scenario, unit labor costs would increase somewhat more moderately than with full wage equalization, meaning that the employment effect would be positive, but somewhat more moderate than without wage equalization. The impact on real GDP would be comparable to the scenario without wage compensation.
Zusammenfassend kann gesagt werden, dass alle drei Formen des Lohnausgleichs zu einer Einbremsung der wirtschaftlichen Entwicklung führen würden. Die Herabstufung der gesetzlichen Arbeitszeit würde zu einer entsprechenden Anpassung der tatsächlich gearbeiteten Stunden führen. Davon wäre die Produktivität je Stunde allerdings nur in geringem Maße beeinflusst. Infolgedessen kommt es zu einer Reduktion der Wertschöpfung, der Erwerbseinkommen und des privaten Konsums. Im Szenario ohne Lohnausgleich fiele der Beschäftigungseffekt moderat positiv aus. Ein etwaiger Lohnausgleich würde die Lohnkosten der Unternehmen erhöhen und die Beschäftigung reduzieren. Auch bei einer möglichen Drittelregelung würde der Beschäftigungseffekt sehr moderat ausfallen.
