A four-day workweek: Some facts and figures to consider

It’s the Tuesday after Labour Day, the annual holiday which celebrates workers’ achievements and gains, including the eight-hour workday and paid leave.

For most Canadians, today is also the beginning of a four-day workweek, a concept that has gained traction in recent years in the ongoing search for a better work-life balance. Some employers in Canada and other countries have tested out the idea, and a handful have adopted it.

Could it work on a larger scale? Ultimately, it depends on the individual employer to make the call—one that would have to take into consideration economic and labour conditions. Let’s have a look at some related data.

Taking care of business…

One question is top of mind: are there enough workers to make it happen?

There is still a significant labour shortage across the Canadian economy, to the tune of 843,200 job vacancies, or a vacancy rate of 4.7% in the first quarter of 2023, though this is down from the all-time high of 984,600 vacancies (or a vacancy rate of 5.6%) observed in the second quarter of 2022.

Vacancy rates varied by sector, with the highest rates observed in accommodation and food services (7.9%), other services (6.4%) and health care and social assistance (6.0%). The lowest rates were in educational services (1.6%), utilities (2.2%), public administration (2.6%), information and cultural industries (3.3%), finance and insurance (3.5%) and wholesale trade (3.5%).

The unemployment rate increased by 0.1 percentage points to 5.5% in July 2023, the third consecutive monthly increase. The number of people working full time and part time held steady.

… and working overtime

Employers will often offer overtime to respond to increased demand for deliverables or to finish projects on time. Of the nearly 15.4 million employees at work across all sectors in July 2023, 15.5% worked some overtime.

However, it varied by sector. About one in five employees in the goods-producing sector (20.6%), including construction (21.8%) and manufacturing (19.4%), clocked extra time in July 2023—a possible indication that a four-day workweek in these industries might require more staff to maintain current productivity levels.

Overtime rates were lower for services-producing sectors such as professional, scientific and technical services (16.6%) and information, culture and recreation (13.5%)—sectors which tend to have more office-type work, rely less on physical outputs and perhaps have more leeway to offer flexible work arrangements.

Capacity utilization

Capacity utilization rates are measures of the intensity with which industries use their production capacity. The total industrial capacity utilization rate in the first quarter of 2023 was 81.9%, largely unchanged from a year ago.

Though rates varied by sector or industry—as high as 90.2% for construction and as low as 63.1% for tobacco manufacturing—they suggest the ability to increase production to meet demand if there is enough staff.

Reducing average hours doesn’t mean low productivity

When we talk about public holidays, we think about a reduction in the average number of hours worked. What we’ve seen in Canada over the past 25 years is a steady decline in this indicator of job quality. However, productivity has risen over this period.

The average hours worked—the hours worked per job—in Canadian businesses decreased from 1,840 hours in 1997 to 1,716 hours in 2022, representing a decline of 0.3% per year on average. The transformation in the nature of jobs and the changing characteristics of workers contributed to the downward trend during this period.

Meanwhile, the labour productivity of Canadian businesses—as measured by gross domestic product (in chained 2012 dollars) per hour worked —reached $57.60 per hour in 2022, compared with $42.90 per hour in 1997, representing an annual growth rate of 1.2% over the same period.

Demographics

Are there enough younger workers entering the workforce to replace retirees?

The 2021 Census of Population indicated that more than one in five working-age persons (21.8%) were aged 55 to 64 years and close to retirement.

In June 2023, just over one in five Canadians aged 55 to 59 years (21.8%) reported they were completely or partially retired, according to analysis conducted by the Labour Force Survey (LFS). For those aged 60 to 64 years, it was more than two in five (44.9%).

However, the same analysis found that more than half of people planning to retire would continue working if they could reduce their hours and stress.

As well, recent LFS analysis from June 2023 found that employment is keeping pace with record population growth.

Telework and flexibility

The shift to increased telework due to the COVID-19 pandemic was possible in part due to the capacity to telework. A 2021 Statistics Canada study found that roughly one in three Canadian workers (36%) was a potential teleworker before the pandemic, and that telework capacity (jobs that could plausibly be done from home) was about 40% nationally.

Telework was more common in certain industries or sectors; for example, in May 2023, over two in five workers in professional, scientific and technical services (41.3%) usually worked exclusively at home, the most of any sector.

The study also found that potential teleworkers might save close to one hour per day by no longer commuting, and those in large cities could save even more time—an ideal scenario for flexible work arrangements.

Business expectations

A four-day workweek would require flexibility on the part of an employer, as well as the possibility of increasing staff numbers and wages.

In the third quarter of 2023, 11.6% of businesses expected to increase their number of employees over the next three months. The proportions were higher for businesses with 5 to 19 employees (12.5%), 20 to 99 (20.3%) and 100 or more (27.6%).

In the previous quarter, nearly one in four businesses planned to offer flexible scheduling (23.1%) or increase wages offered to new employees (23.4%) in the next 12 months.

Nearly half (47.6%) of businesses planned to increase wages for existing employees over the next 12 months.