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The Rise of European Leisure

Every day, more and more Swedish workers are working less and less. This is not because of unemployment or laziness, but due to a societal shift towards a six-hour workday. Many companies across the Scandinavian country have formally adopted the shorter workday claiming that less work increases productivity. The central idea behind this seemingly paradoxical move is to boost people’s productivity by encouraging them to be highly focused for shorter periods and leaving more time for leisure, rather than making employees work longer, but less efficiently. This policy also fosters an environment more conducive to productivity by increasing workplace cooperation, decreasing conflicts, and giving people time for other parts of their lives. The CEOs of Swedish companies like Filimundus and Brath are defending the shift to a six-hour workday, saying that their employees now have more time “for the family, picking up the kids at day care, spending time training for a race or simply just cooking good food at home”.

Beyond Sweden, Western Europe in general is also experiencing a trend towards fewer average working hours and increased leisure time. Adjusted for unemployment and the number of holidays, Americans rack up an average of 25.1 working hours per week, while Germans only work an average of 18.6 hours per week. The average American also works 46.2 weeks per year, six weeks more than the average French worker. While France and Germany worked more than the US in the 1960s, this trend has reversed as the average working time has increased for US workers and sharply decreased for their French and German counterparts. In Europe, the result has been a very pronounced shift towards more leisure time.

There are multiple explanations for the large differences between the working time of Western Europe and the US. They break down into two main categories: economic and cultural.

First, fundamental economic differences have led to a divergence in the labor supply between the US and Europe. Edward Prescott, winner of the Nobel Memorial Prize in Economics in 2004, has proposed that “virtually all of the large differences between U.S. labor supply and those of Germany and France are due to differences in tax systems.” For Prescott, Europe’s gradual move towards higher tax rates affects the way people react to higher wages.

To understand this, keep in mind that microeconomic theory suggests that the effect of higher wages on leisure time is ambiguous, as it is subject to two countervailing forces – the income effect and the substitution effect. The income effect means that with higher incomes, workers would choose more leisure, simply because greater income means workers can afford more leisure time. On the other hand, with higher wages the opportunity cost of leisure rises as each additional hour of work now brings a greater reward. So, the substitution effect suggests that with higher wages workers have an incentive to work more.

Prescott’s 2004 paper on the subject argues that different tax rates in Europe and the US are the main reason why the income effect dominates in European countries while the substitution effect dominates in the US. Higher progressive tax rates in Europe imply higher taxes for higher incomes – so Europeans choose more leisure and the income effect dominates. Compared to Europe, Americans face lower tax rates at high wages, so they want to work more as they will actually get more money – the substitution effect dominates. While Prescott’s theory has many implications, even at the level of policy, some economists rightly argue that such an explanation would also imply an unrealistic elasticity of labor supply.

Another compelling theory is that specific European market regulations, largely pushed for by unions, have led to more leisure time. A 2005 paper by Alberto Alesina, Edward Glaeser and Bruce Sacerdote argues that Prescott overstates the effects of tax rates. Instead, the authors propose that certain “work less, work all” regulations pushed for by politically powerful unions in declining industries in Europe explain the trends in worktime. These regulations were intended to counteract the fact that incredible technological advancement and structural change since the 1960s made a significant fraction of the labor force superfluous in many industries. Such “work less, work all” policies keep the labor force in declining industries employed by reducing the amount of work or the work time. Thus, the intervention of Labor unions explains why leisure time has been increasing in Europe and not in America. This theory would also explain why the decline of unions and union membership in the U.S. – from 35% in the mid-1950s to a little over 10% today – coincides with a rise in working hours for the average American worker.

Aside from economic differences, another explication may reside in cultural differences, which present themselves in the preferences of workers in Europe versus in the US. As technological advances and economic growth have brought more prosperity, people in post-industrial societies face a choice between higher incomes and increased leisure time. According to economist Oliver Blanchard, Americans have chosen the former and Europeans the latter. A 2015 economic paper by Naci Mocan and Luiza Pogorelova attributes this to what the authors call a “culture of leisure”. Based on comparisons between second-generation immigrants and native workers in 26 European countries, this paper finds a statistically significant relationship between having a “culture of leisure” and hours spent working. The United States, on the other hand, has a long intellectual tradition of condemning laziness and leisure. Benjamin Franklin, one of the country’s “founding fathers”, is famous for having said that “Idleness is a Dead Sea that swallows all virtues”.

Despite Europe’s recent interest in shortening the workday, the philosophical, political, and economic arguments for this change are nothing new. In his influential 1932 essay “In Praise of Idleness”, British philosopher, mathematician, and Nobel laureate Bertrand Russell offers arguments for more leisure. Russell argues that work is an overrated virtue and that – even in 1932 – technology was at a point where people could work no more than 20 hours a week, contribute to society, and make a living. The rest of the time, according to Russell, could be used for relaxation, cultural activities, or volunteer work. He contends that civilized living demands leisure time during which personal interests can be pursued. It is illogical to live in a society where some are overworked while others are unemployed, so shortening the workday could also have the economic benefit of lowering unemployment. For Russell, the social normalization of the duty to work represents a “morality of the slave”, a device used by those in power to induce others to work for their interests. Consistent with this Marxist analysis of the labor market, the paper argues for the importance of unions and organized labor for more leisure time.

Although the economic implications and political plausibility of Bertrand Russell’s proposal can be debated or even denounced, his philosophical arguments for more leisure are important. The economic privileges of developed nations – advanced technology and accumulated wealth – should allow shorter working hours. Leisure time enables workers to spend more time with family and friends, pursue other interests, foster culture and the arts, as well as contribute to their community. Countries like France, Germany, and now Sweden demonstrate that with modern technology, it is possible to increase leisure time without reducing productivity levels and growth. More leisure is not just a positive step in development of wealthy nations, it is a necessary one. With the recent success of increased leisure time in Western Europe, US firms, workers, and policymakers ought to sit back, relax, and take a page from Europe’s playbook.

Photo: Chris Goldberg