Iceland's economy thrives after adopting shorter work week with no pay cuts

Iceland's economy is thriving after implementing a shorter work week with no pay cuts. Research shows that over half of workers participated in this change from 2020 to 2022, contributing to faster economic growth and low unemployment rates. The trials, conducted between 2015 and 2019, involved public sector employees working 35-36 hours weekly. Productivity remained stable or improved, while workers reported better well-being. Following these trials, unions negotiated reduced hours for many workers. In 2023, Iceland's economy grew by 5%, the second highest in Europe, significantly above its previous average. Unemployment was low at 3.4%, but forecasts suggest a slight increase in the coming years due to reduced domestic demand and tourism spending.