How part time work could help productivity and boost health

This article is brought to you thanks to the collaboration of The European Sting with the World Economic Forum.

Author: Jeroen Neckebrouck, Assistant Professor of Entrepreneurship, IESE Business School

• A new IESE study upends assumptions about part time work and finds more flexible work arrangements can benefit companies and employees.
• While we found part time work leads to a general increase in firm-level productivity, the impact varied widely by sector and gender.
• Part time work was also found to raise productivity in new companies as well as in established firms.

With many employees worldwide re-examining their jobs and searching for greater work-life balance, part time work could help raise stagnant productivity levels as well as support health, a new study by the IESE Business School shows.

The study upends assumptions that part time work is a necessary evil to accommodate people who need more time outside the office. It also contributes to the conversation about how more flexible work arrangements, such as the four-day week, can benefit companies and their employees.

The benefits in numbers

We found that a 10-percentage-point increase (e.g. from 15% to 25%) in the share of employees working part-time is associated with a 2% increase in firm-level labour productivity, measured as the firm-level gross added value per working hour. That’s more than double the average 0.9% annual increase in productivity seen in the EU over the past decade, according to Organization for Economic Cooperation and Development (OECD) figures.

And as our working lives lengthen, shorter schedules could also help employees respond to changing needs, from tending to young children or transitioning towards retirement.

Part time work also had other significant benefits. A 10-percentage-point increase in part time workers is associated with a 3-7% reduction in total sick days per year, which reinforces other research findings that less-rigid labour arrangements support the health of employees.

That doesn’t mean all workers should go part-time. Productivity boosts seem to level out when around 30% of employees are on reduced hours.

Patterns in part time work vary by sector, gender

While we found that part time work generally increases firm-level productivity, the impact varied widely by sector. In professional, scientific and technical industry sectors, at the top of gains, a 10-percentage-point increase produced a 3.3% boost in productivity; in the sectors of transportation and storage, education, and human health and social work, there was no positive impact from an increased share of part-time contracts on a firm’s productivity. Clearly, some positions lend themselves to reduced schedules more than others do.

Part time work raises productivity in new and established companies; the company’s age doesn’t matter in terms of the part time work-productivity correlation. Neither does the age of the employee. The study surveyed people aged 20 to 65 and found no critical differences in productivity gains.

But how long someone has been with a company does matter: the impact of part time work on firm-level productivity is greater when it involves tenured employees rather than recent hires. This suggests that it’s more effective to give employees part-time options after they have been with the company for a while, are fully acquainted with it, and have built social relationships with others rather than immediately after they are hired.

Even as countries have taken steps toward workplace equality, part time work continues to have a high disparity among genders. In the sample, 52% of women worked part time, while only 17% of men did.

In industries that are typically male-dominated – such as construction, information and communication, and mining – part time work accounted for less than 15% of employees. In more female-oriented industries, such as human health, social work, and education, it was 60% or higher.

The Belgian example

The study focused on Belgium, an interesting case study for emerging labour-market trends, and looked at 7,575 private-sector firms and 824,000 employees from 2016 to 2022. In Belgium, part time work is defined as not full-time and a minimum of 12 hours/week; on average, a part-time job represents about 60% of a full-time job.

Belgium has one of the highest part time work rates in Europe, with about a quarter of the workforce working part-time, according to OECD figures. The Netherlands, at 43%, has the highest; the European average is 18%.

Like the UK and other countries, Belgium is also looking at new options for the traditional five-day, 40-hour work week. The general convention for full-time employment is a 38-hour week in Belgium; 40 hours is also common, and gives employees the right to request an additional 12 days of vacation time per year.

In late 2022, Belgium workers were allowed to work their full 38 hours in four days, without any loss of salary, as part of efforts to draw more people into the workforce. That’s part of a global movement, such as a recent six-month trial in the UK allowing workers at more than 60 companies to work a four-day work week. At the end of the trial, more than 90% of participating businesses decided to continue with the arrangement, with 18 adopting it permanently.

Part-time options and non-traditional schedules have often been approached as an extra perk for employees and a way to retain talent. While that may continue to be part of their appeal, companies need to understand that flexible arrangements may also have firm-level benefits.