Macroeconomic Effects of Shorter Working Hours in Austria

The study examines the sectoral and macroeconomic effects of changing working hours in Austria. The starting point of the analysis is a (hypothetical) scenario in which the working hours of employed persons are changed by means of collective bargaining and company regulations in such a way that they correspond to individual preferences. The change in working hours is calculated from microdata (Austrian Labour Force Survey) under the assumption that all employees reduce or expand their working hours to the preferred level. From this, the average change in working hours per sector is calculated and used as a starting point for estimating the macroeconomic effects. Overall, the desired change in normal weekly working hours is –1.2 hours (–3.3 percent) according to the Austrian Labour Force Survey 2019. In macroeconomic terms, the change in working hours results in effects on employment of 1 to 2 percent, depending on the scenario. GDP falls by less than 1 percent in all scenarios.