The Effects of Working Time on Productivity and Firm Performance, Research Synthesis Paper

Abstract

This research synthesis paper attempts to summarize the various effects of working time, in its multiple dimensions, described in the research literature in the past years. It covers the available empirical evidence regarding the effects of both hours of work and flexible types of working time arrangements. It discusses in particular the effects of long working hours and flexibility in the timing of work schedules and their impact on both labour productivity and firm performance via the underlying long-run labour costs. It considers the various dimensions of working time and its features of interest, such as duration, flexibility, variability (unpredictability) and divergence from preferences (mismatches — overemployment and underemployment). It reviews the credible, state-of-the-art research studies, particularly those conducted since 2000, from many countries, so as to help inform discussions between the three social players and their experts. Those studies are both macroeconomic and microeconomic in scope, although the latter predominate. This paper covers the broadest possible range of relevant literature, by both discipline and country, including developed and developing countries. The literature is vast and nuanced, and inevitably some stones are likely to have been left unturned in this synopsis. The paper examines the effects of working time first on worker productivity and then on the longer run factors that affect costs. Individual performance and costs associated with the length and flexibility of working time can often influence firm performance. The paper considers the number of normal hours, short hours (less than 35 hours per week), and long hours (over 48 hours per week), but focuses on the observed effects of various types of flexible working time arrangements (i.e. flexitime, compressed workweeks, hours averaging, working time accounts/time banking, etc.) and different shift schedules. It refers to programmes, policies and practices initiated by employers that allow workers at least some discretion in adjusting the length and/or scheduling of their working time to meet their preferences.

Keywords: Working Time, Flexible Work Schedules, Labor Productivity