Iceland’s economy grew more than all but one other rich European nation and its workers reported higher well-being, lower stress, and better work-life balance after the country reduced its standard work week from 40 to 36 hours, research published Friday affirmed.

The study—released by a pair of think tanks, London-based Autonomy Institute and Alda (Association for Sustainability and Democracy) of Reykjavík, Iceland—”offers new insight into the program of working-time reduction that has taken place in Iceland, following successful public sector trials in the country.”

“After successful pilot schemes in the Icelandic national government and Reykjavík City Council between 2015 and 2019 which found improvements to employee well-being as well as productivity, historic labor agreements between Icelandic trade unions and employers ’embedded’ the right to shorter hours for hundreds of thousands of workers,” study authors Guðmundur Haraldsson, Jack Kellam, and Rowan Trickett noted.

The new report analyzed the results of studies conducted by the Social Science Research Institute at the University of Iceland, the Icelandic Ministry of Social Affairs and Labor, and Occupational Safety and Health Administration “to understand job patterns,
work environment, and the reasons why individuals left paid employment” in 2021 and 2022.

Key findings include:

  • 62% of people working reduced hours reported being more satisfied with their schedule;
  • 97% of workers thought that shorter working hours had made it easier to balance work with their private life, or at least kept the balance the same as before (with more than half, 52%, thinking it had improved); and
  • 42% of those who had moved to shorter hours thought that it had decreased stress in their private life, vs. 6% who felt it had increased.

“This study shows a real success story: Shorter working hours have become widespread in Iceland… and the economy is strong across a number of indicators,” Haraldsson said in a statement.

In 2023, Iceland’s economy expanded by 5%, a growth rate second only to that of Malta among rich European economies, according to the International Monetary Fund’s latest World Economic Outlook, published earlier this week. That is much higher than the country’s average growth rate of almost 2% in the decade between 2006 and 2015.

“Overall, the Icelandic economy has remained strong post the introduction of a widespread shorter working week,” Autonomy Institute research director Will Stronge said in a statement. “The evidence we’ve collected suggests that when workers have a better work-life balance and are better rested—the economy benefits too.”

“The Iceland story offers a very different vision to countries across Europe that are grappling with low productivity but trying the same old failed methods,” he added.


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