Five years after Iceland introduced large-scale trials of a shorter working week, the results suggest the reform has become a structural feature of the country’s labour market. Reduced hours without pay cuts have not undermined productivity and are now widely embedded across sectors.
From Pilot Programme to National Norm
Iceland began testing shorter working weeks in 2019 across public sector workplaces, including municipal offices, hospitals and childcare services. Weekly working hours were reduced to around 35–36 without salary reductions.
Initial scepticism centred on fears of falling productivity and service disruption. However, performance levels largely remained stable, and in some cases improved. Following successful trials, trade unions renegotiated collective agreements in 2021, extending shorter working hours more broadly.
Today, approximately 90% of Icelandic workers either work reduced hours or have the contractual right to request them.
Redesigning the Workday
The success of the reform stemmed not simply from cutting one day of work, but from restructuring internal workflows. Meetings were shortened, reporting processes streamlined, and administrative tasks automated. Organisations shifted from valuing presence to valuing output.
Many workplaces introduced focused work periods with minimal interruptions, improving efficiency during reduced hours. Performance evaluation increasingly centred on results rather than time spent at a desk.
Economic and Social Outcomes
Crucially, salaries were not reduced alongside working hours. The reform relied on collective bargaining and operational efficiency gains rather than cost-cutting measures. Surveys indicate lower burnout levels, improved work-life balance and higher employee satisfaction.
Parents report greater family time, while older workers indicate they are more likely to remain employed longer due to a more sustainable pace of work.
Broader Implications
While Iceland’s experience reflects specific institutional and economic conditions, it demonstrates that reduced working hours can be compatible with stable productivity when accompanied by structural workflow reform. Sectors such as healthcare required more complex rota adjustments, but adaptation proved possible.
As experts from International Investment report, Iceland’s four-day workweek illustrates that shorter hours with maintained pay can be economically viable when supported by strong social dialogue, efficient organisational redesign and macroeconomic stability.