May 6, 2019

The average Dutch person works a 29 hour week. We could too, if we increased hourly productivity, reduced housing costs and reformed the public sector.

Forecasting Eye 

 

It’s interesting that there doesn’t seem to be much of a rush hour in Amsterdam on a Friday morning as I discovered arriving there off the Harwich ferry last week.

 

Many of the Dutch don’t seem to work Fridays. According to Dutch law you are allowed to work a maximum of 9 hours a day and 45 hours a week. However, a person is only allowed to work 2080 hours a year. The latest OECD study of working hours (contained in the OECD Employment Outlook https://www.oecd.org/els/emp/2080270.pdf) shows that the average working week for Dutch men is 34 hours and for women 25 hours. The average Dutch person works a 29 hour week which is now the shortest standard working week in the world. Their annual average working hours are nearly the lowest (after Germany, Denmark and Norway) the difference being that the Dutch have fewer part time workers.

 

Yet, the Dutch seem fairly well off. They are the 12th richest country in the world in terms of GDP per capita adjusted for the cost of living at $56,363. All the countries above them, with the exception of the US and Ireland, either have natural resources or are small city states. In Ireland the GDP per capita measure is a misleading indicator of living standards because it is boosted by foreign profits often transferred there to take advantage of the low corporation tax levels.

 

And indeed a quick regression of working hours against per capita GDP might suggest that the fewer hours you work the richer you become. But that would be wrong. The more likely causation is that the richer you are, the more you can afford to trade off income for leisure.

 

I drew attention 18 months ago to the increasing numbers of people in the UK choosing lifestyle jobs over those that might be more remunerative.

 

It would be logical for some of those who have the option to trade off income for leisure. Such a trade off could make us happier if poorer and should reduce environmental pressures. In the UK we work 10% more hours than the Dutch, 1,588 hours a year compared with 1,433 hours.

 

We could cover much of the cost by raising productivity and by reducing the cost of living by making housing more easily available.

 

But one person who will lose out will be the taxman. Incomes are taxed, leisure is not. So if we start to choose leisure instead of income, even if we covered half the cost by being more productive, it would leave a £40 billion hole in public finances. To cover this the UK will have to make the public sector more efficient (compared with the private sector its productivity has fallen by about 15% since Tony Blair came to power) or raise money in other ways.

 

Of course, if we had a more leisured society, we might place fewer demands on public services.

 

Contact: Douglas McWilliams dmcwilliams@cebr.com – 020 7324 2860

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