Could the 4-day work week . . . work?

This is an audio transcript of the FT News Briefing podcast episode: ‘Could the 4-day work week . . . work?’

Marc Filippino
Good morning from the Financial Times. Today is Tuesday, December 6th, and this is your FT News Briefing.

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US investors did not like the latest data at the American services sector. PricewaterhouseCoopers is prepared to poach senior executives from its rival, Ernst & Young. And Chinese battery makers are coming for Europe. Plus, have you ever dreamed about a four-day work week? Of course you have. Some places are turning that dream into a reality. I’m Marc Filippino and here’s the news you need to start your day.

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The American services sector grew last month, marking 30 straight months of growth. The Institute for Supply Management came out with its monthly report yesterday. The ISM found that its index that tracks economic activity in the services sector rose 2 per cent from October to November. Services in this case include industries like hospitality, transportation and construction. Investors took that news hard. The S&P 500 was down as much as 2 per cent yesterday. Stocks have been riding high recently on the idea that inflation had peaked and that the Federal Reserve might be ready to slow the pace of interest rate increases.

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PwC is trying to take advantage of an uncertain time for its rival, EY. You might remember that EY is going to vote on whether to spin off its advisory operations from its audit business. It’s the biggest shake-up at a Big Four accounting firm in decades. Now, PwC is ready to poach some of its rivals’ most senior executives. Here’s the FT’s Stephen Foley.

Stephen Foley
PwC, like all of the Big Four firms, have been growing like crazy in the last few years. They’ve been adding as many new people as they possibly can to keep up with demand on the consulting side of the business and growth in audit as well. And what’s happening at EY is one of the potentially biggest disruptive things in this industry right now. And because of all that uncertainty, PwC has told its partners that there’s a once-in-a-generation opportunity to peel away some of the staff and some of the partners, really quite high-level partners, it hopes, from EY.

Marc Filippino
Now, Stephen, is there any sense that EY employees want to leave?

Stephen Foley
Well, at the moment we’re gonna have to see, right? This is, a big proof of the pudding is gonna be in the eating here. One of the things that drives a lot of the partners at EY crazy, particularly on the consulting side, is all of the restrictions that stops them picking up clients. If EY is doing an audit for these clients, they’re heavily restricted from doing other kinds of services for them because of the potential conflicts of interest. EY’s pitch to its partners is that split apart, there won’t be quite such onerous conflicts and the new consulting business will be able to pick up many, many more clients that are currently audit clients. And the audit business too will be able to go after people that previously the consultants have snaffled.

Marc Filippino
So the partners, they’re the ones who actually vote on whether to make this split at EY. If enough of them leave, could that sway the vote one way or another?

Stephen Foley
Look, there’s 13,000 partners at EY globally. I don’t think PwC is expected to pick up a ginormous chunk of these. The leadership at PwC in the US have said they’ve got capacity to bring in up to 500 partners. That won’t just be from EY, of course. The really interesting thing on the vote is when is it going to come? We were expecting it around now, frankly, in the biggest territories — the UK and the US — but it’s been delayed into next year. So at the moment it’s looking like February, March could be the time for these votes. They haven’t yet got all the details pinned down and it’s proving very complex.

Marc Filippino
That’s the FT’s US accounting editor, Stephen Foley.

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Europe has been a hub of combustion car engine production for decades, but the industry is shifting to electric vehicles and China is taking over. By 2031, China is projected to have more battery production capacity in Europe than any other country. That’s according to an analysis by data provider Benchmark Minerals. But industry executives and policymakers are worried about relying more on Chinese technology as geopolitical tensions heat up. An EU official told the FT that ongoing conflicts with Russia and China will push Europe to be more independent on EV battery sourcing in the future.

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The pandemic changed the rules around work and started a conversation about alternatives to the traditional office job. One of those alternatives is a four-day work week where people work one fewer day without making any less money. A non-profit in New Zealand wanted to put that idea to the test. They organised a global pilot programme this year and the FT’s Working It podcast tagged along with four UK companies involved in it. Here to discuss what they found is Working It host Isabel Berwick. She’s also the FT’s Work & Careers editor. Hi, Isabel.

Isabel Berwick
Hi, Marc.

Marc Filippino
So, Isabel, why is the idea of a four-day work week becoming more popular now?

Isabel Berwick
It’s a kind of zeitgeisty thing. You know, we’re at this post-pandemic moment. People are rethinking their lives. The idea of flexible and hybrid working is uppermost in a lot of, certainly a lot of office workers’ minds. And from the businesses point of view, a lot of people have got retention issues. You know, staff are leaving that they don’t want to leave. And the idea of having something novel that you could offer to new recruits is something that’s very appealing to businesses, particularly younger, kind of start-up, tech-type businesses. So we’re at a particular moment in the business cycle, I think. And in our cycle as human beings, as we come out of the pandemic, that makes this really appealing.

Marc Filippino
Right, I mean, that makes sense. So what else did you find in terms of the benefits of a four-day work week?

Isabel Berwick
There were loads, many more than I’d expected, actually. And the one that I hadn’t expected was that loads of meetings get cancelled, which a lot of people would be excited to hear. Other benefits include people feel more relaxed. They feel more engaged when they are at work. It’s a lot of work to put in place. But, you know, there are huge benefits, I think, on both sides.

Marc Filippino
Now, in addition to that, I understand there’s an argument for it being more productive in some ways. What did you hear from some of the businesses you followed?

Isabel Berwick
Yes, exactly. So particularly from the business leaders’ point of view, that’s really positive. So this is Banks Benitez, who’s CEO of Uncharted. It’s a company that supports entrepreneurs. And he ran a three-month pilot in 2020 after seeing his team burn out at the start of the pandemic. And this is what he found.

Banks Benitez
Switching to a four-day work week is going to reveal the inefficiencies in your business. It’s gonna reveal the blind spots that you have as leaders. It’s gonna reveal these subterranean beliefs in your culture that you can do it all.

Isabel Berwick
So as Banks says there, you know, some of the drawbacks are that if you aren’t efficient as a company in terms of your admin and your project management, it’s gonna be a problem. For example, one company we talked to spent several months just getting ready for the four-day week because you need to make sure someone’s covering the clients or the project every day.

Marc Filippino
I see. So it sounds like they needed to do more preparation for a four-day work week than they would for a five. What are some of the other drawbacks? I understand that a fish and chips shop that you followed for the series ran into some issues, too.

Isabel Berwick
So I think some of the companies did find that some work fell by the wayside. And actually some of them only offered the fifth day off if they reach certain productivity or retention targets for clients. And the other big issue, which I hadn’t thought about and really came as a surprise, was that some people were looking for other jobs on their fifth day, or a paid side hustle. And here’s Luke Platten, he’s the owner of the fish and chip shop that we followed.

Luke Platten
We’ve had two members that have gone off thought, “Oh, this is fantastic. I can go get a second job.” And suddenly it’s like, “Hang on a minute. I understand the reasons why you’re doing that. But are you then feeling refreshed at the end of it?” And they’re not, they’re coming in absolutely knackered.

Isabel Berwick
The whole point of the fifth day off is to make you feel refreshed, especially with these jobs when you’re on your feet all day. But as we head into a recession, you know, hard economic times, I do wonder how many people doing four-day weeks will seek to earn more money on their fifth day.

Marc Filippino
So what do you think, Isabel? We’ve laid out the pros and the cons. Does the four-day work week have any real chance of taking off?

Isabel Berwick
I think it’s easier for some companies than others. You know, obviously, office-based work is easier than shift and hospitality work. But our fish and chip shop is going ahead with the trial. You know, they’re gonna make that permanent. So it is possible. And some big companies are starting to trial the four-day week. Unilever is trialling it for 18 months in Australia, having done it successfully in New Zealand. So I think we’ll start to see these things fan out across the world. Whether or not it takes off in America, where the work culture is perhaps quite different from that in the UK, Europe and Australia, I think that’s another question mark.

Marc Filippino
That’s Isabel Berwick, she’s the FT’s Work & Careers editor and the host of the FT’s Working It podcast. You can hear the first two episodes of Working It’s series on the four-day work week. We’ll have that link in the show notes. Thank you, Isabel.

Isabel Berwick
Thank you, Marc.

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Marc Filippino
You can read more on all of these stories at FT.com. This has been your daily FT News Briefing. Make sure you check back tomorrow for the latest business news.

This episode incorrectly identifies Banks Benitez as the current chief executive of Uncharted. He is the former CEO