Skilled workers stand to gain most from reduced working hours

They point out that less-educated workers already work closer to a 36-hour week— the central Constitutional Amendment Proposal (PEC) introduced by federal deputy Erika Hilton, which seeks to end the 6 x 1 work schedule.

According to the researchers, average weekly working hours in Brazil remain below the legal cap of 44 hours, standing at 38.4 hours in 2024. But among those with no formal education or incomplete elementary schooling, the average is already 36.2 hours. The average for those with complete elementary and incomplete high school education is 37.8 hours.

The longest working hours are concentrated among those with a high school diploma and incomplete college education, averaging 39.3 hours per week. Workers with a completed higher education clock in at 38.9 hours per week.

The data challenge the assumption that those with the lowest income and educational attainment—typically the focus of advocacy for reduced work hours—are the ones working the longest. According to Mr. Barbosa Filho, this is not borne out by the evidence.

Cutting working hours without reducing pay effectively raises the hourly wage of each worker. But in this scenario, too, the researchers argue that the most qualified employees stand to gain the most.

Mr. Barbosa Filho and Mr. Peruchetti estimate that workers with a high school diploma and incomplete college education, as well as those with a college degree, would see real wage increases of 9% and 8%, respectively.

By contrast, uneducated workers and those with incomplete elementary education would see their income rise by just 0.7%. Workers with a high school diploma and incomplete higher education would gain about 5%.

In a separate analysis, Mr. Barbosa Filho had previously estimated that, considering labor as the sole factor of production, a reduction in the workweek to 36 hours would result in a 6.2% decrease in total hours worked—and, by extension, in the value added to the economy. However, the impact would vary significantly across sectors, with estimated losses ranging from 1.4% to 14.2%, according to the researchers.

Sectors with longer average work hours, they argue, would face greater adaptation costs under the proposed change.

Transportation, extractive industries, and commerce currently lead in weekly work hours, averaging 42, 41.2, and 41 hours, respectively. The researchers project that cutting working hours would reduce value added by 14.2% in transportation, 12.6% in extractive industries, and 12.2% in commerce. Public Utility Industrial Services (SIUP—which includes the production of electricity, gas, and water) would see a 10.6% reduction, while information and communication services would experience a 10.5% drop.

Conversely, the sectors expected to suffer the smallest losses are “other services”—which comprise most services provided to families—and Public Administration (APU, which covers areas like defense, social security, education, health, and social services), with declines of just 1.4% and 1.7%, respectively.

The researchers note that these sectors already operate close to a 36-hour workweek. Still, Mr. Barbosa Filho questions whether businesses in “other services”—typically small entrepreneurs—could realistically reorganize their working hours. In the case of commerce, he adds, much of the workforce relies heavily on commission-based pay, complicating the shift.

Supporters of a shorter workweek often argue that productivity gains could compensate for increased labor costs. Mr. Barbosa Filho and Mr. Peruchetti estimate that in agriculture, for instance, historical productivity growth—5.2% per hour worked between 2012 and 2024—could offset potential losses. However, they point out that agricultural productivity is well above the national average, which has remained stagnant.

According to the researchers, even a 2% increase in hourly productivity would fall short of offsetting the losses in most sectors.

For the analysis by formal qualification, the researchers note they were unable to isolate the value added by different educational groups. Instead, they used the evolution of adequate hourly wages as a proxy for productivity growth across those groups, arguing that in competitive markets, wages should reflect productivity gains.

Between 2012 and 2024, the educational group that saw the highest wage growth was composed of workers with no education and incomplete primary education, whose hourly earnings rose by an average of 0.9% per year. Those with complete elementary education and incomplete secondary education experienced a 0.5% increase. In contrast, workers with complete secondary education and incomplete higher education saw their wages fall by 0.3%, while those with a college degree saw a decline of 1.1%.

“If we consider wage gains as a proxy for productivity gains, only lower-skilled workers recorded productivity growth during the period. Therefore, it is unlikely that productivity gains will offset the rise in hourly wages resulting from a reduction in working hours,” the study states.

The researchers also stress that their findings do not account for how employers might respond to a shorter workweek. Since this would raise unit labor costs (ULC), companies could be expected to reduce hiring, potentially resulting in job losses.

ULC represents the labor cost per unit of output—that is, the share of value generated that is allocated to employee compensation, explains Guilherme Zimmermann, an economist at Bradesco. “In recent years, productivity has shown modest or virtually no growth. In contrast, ULC has been rising steadily,” Mr. Zimmermann noted in a recent report.

According to him, virtually all real wage growth in the recent period has stemmed from increases in ULC, not from productivity improvements. “This imbalance suggests that wages have been growing faster than workers’ average productive capacity, which could exert further pressure on costs and prices if it continues,” he warns.

*By Anaïs Fernandes — São Paulo

Source: Valor International

https://valorinternational.globo.com