Introduction to Mexico’s 40-Hour Workweek Initiative
Mexico is on the brink of one of the most significant labor changes in recent decades: reducing the workweek to 40 hours. Although this is a new discussion, shorter workweeks are becoming a reality worldwide, with evidence of their effects on productivity, employment, and well-being.
According to data from the International Labour Organization (ILO), by 2005, half of the world’s countries already had a 40-hour weekly work limit, and a quarter had limits between 41 and 46 hours per week.
Successful Reductions in Working Hours
There is extensive evidence of both successful methods to reduce working hours and their impacts, as outlined in the ILO report “Reduction of Working Hours: Global Evolution and Challenges for Latin America.”
The report indicates that the benefits of reducing working hours encompass both non-monetary and economic aspects.
Health and Well-being
The correlation between long working hours and deteriorating health is evident. In economies that have opted for shorter workweeks, positive impacts related to people’s health have been documented.
For instance, in France, reducing the workweek to 35 hours has been linked to a decrease in tobacco addiction. In Sweden, it resulted in a 15% reduction in mortality rates over the six years following the reform.
“There is also a clearly negative relationship between long working hours and non-material aspects of well-being, such as job satisfaction, personal life, and leisure time,” the ILO report by Sonia Gontero and Sonia Albornoz highlights.
Employment
Most studies show a moderate impact on employment; in other words, not all cases result in increased hirings or mass layoffs.
A study by IZA, the research institute on labor markets, in France, Belgium, Italy, Slovenia, and Portugal found that reducing working hours was not generally compensated for by an increase in hiring personnel.
“In cases where sector or company-level reductions of working hours have been implemented, as in Germany, South Korea, and Portugal, the results are contrasting but suggest that, in certain contexts, virtuous circles could be created: reducing working hours might lead to increased productivity, which in turn limits the increase in labor costs per unit produced and, consequently, prevents potential negative effects on job growth,” the ILO researchers note in their report.
However, it remains unclear whether reducing working hours leads to changes in job composition, such as increased informality, a higher proportion of part-time work, or greater use of overtime hours.
Productivity
It is challenging to conclude the effects of a reduced working hour on productivity. Sonia Gontero and Sonia Albornoz acknowledge that there are two indicators suggesting that the legal change might translate to higher performance.
The theory suggests that, among workers, the decrease in fatigue could improve individual performance; meanwhile, companies might review processes, innovate, and invest in fixed and human capital to boost efficiency, positively impacting productivity.
However, “empirical evidence of this relationship is scarce due to methodological difficulties.” What is certain is that productivity effects largely depend on “the economic context in which it is applied, the prevailing number of hours, and the composition of the labor market,” as warned by the ILO researchers in their report.
Key Factors for Successful Reduction of Working Hours
- Extent and enforcement of labor regulation: A higher proportion of formal salaried workers and institutional capacity for oversight will result in a more significant real impact of a reform on actual working hours.
- Coverage of collective bargaining: In contexts where strategic sectors have already reduced working hours through collective bargaining, a national regulation’s impact might be more limited.
- Labor market composition and characteristics: The prevalence of part-time work, excessive working hours, multiple jobs, labor supply and demand balance, female labor force participation, low-wage workers’ proportion, or the employment structure by sector are elements that influence actual working hours and, consequently, potential reform effects.
“It is crucial for national legislations to adapt to each country’s economic and social realities, balancing worker protection with productive sector needs. Dialogue among stakeholders can play a key role in reconciling the various interests of labor market actors and advancing towards more sustainable and equitable work organization models,” the ILO report concludes.
Key Questions and Answers
- What are the benefits of reducing working hours? Evidence shows positive impacts on health, job satisfaction, and well-being. The effects on productivity depend on the context.
- How does reducing working hours affect employment? Most studies show a moderate impact, with no consistent increase in hirings or layoffs. In some cases, productivity gains can offset labor cost increases.
- What factors determine the success of a reduced working hour initiative? Key factors include labor regulation extent and enforcement, collective bargaining coverage, and the existing labor market composition.
