Iceland’s shift to a shorter working week, initiated through trials from 2015-2019, has set an example of economic resilience and growth tied to work-life balance. The trials, conducted by Reykjavik City Council and the national government, reduced the standard working week to 35-36 hours without any reduction in pay. This successful experiment now affects a large majority of Iceland’s workforce, where around 86% have transitioned to shorter hours or gained the right to do so.
Since implementing the shorter workweek, Iceland's economy has flourished. By 2023, Iceland’s GDP growth reached 4.1%, outperforming the OECD average, and was comparable only to economies like Costa Rica and Turkey. Additionally, the unemployment rate in Iceland remains impressively low at 3.6%, underscoring robust labour demand across various sectors. Notably, productivity has also seen a boost, averaging a 1.5% annual increase, a significant improvement over previous years when Iceland lagged behind its Nordic peers in productivity rates.
The positive effects of this shift highlight how shorter working hours can enhance productivity and employee well-being. According to the Autonomy Institute and Alda, these findings suggest a strong link between balanced work hours and economic benefits. Workers report better quality of life, more time for personal commitments, and greater engagement in their roles, which collectively drive economic strength and social cohesion.
Countries worldwide, including Spain, Japan, and Germany, are observing Iceland’s success and considering similar policies to promote work-life balance. Iceland’s transition demonstrates that progressive labour policies, such as a four-day workweek, can support economic growth and provide workers with a healthier balance, which may encourage other nations to follow suit.
You can learn more about the benefits of the 4 day work week here
