Tax incentives among possible solutions to stimulate four-day week

At issue is a type of work in which there is a reduction in weekly working hours, without a reduction in salary.

The granting of tax incentives to companies or exempting them from some bureaucratic obligations could be solutions to encourage the application of the four-day week, indicates the final report of the pilot project of this type of working week.

The creation of a more favorable tax regime, to encourage this new form of work, could be achieved by reducing taxes or granting tax credits on a temporary basis or by making direct subsidies or financial incentives available to companies, suggest the coordinators of the study, released today.

In the final report of the four-day week pilot project, Pedro Gomes, professor of economics at the University of London, and Rita Fontinha, professor of strategic human resources management at the University of Reading, point out three axes – experiment, encourage, legislate – and the steps that can be taken in each, on the way to the four-day week.

At issue is a type of work in which there is a reduction in weekly working hours, without a reduction in salary and which has been applied in practice, over the last few months in Portugal by 41 companies experimenting with the four-day week in Portugal (of which 21 companies will coordinate the start of the test through the pilot project in June 2023).

In terms of stimulating, in addition to incentives at company level such as those already mentioned, the study also suggests incentives aimed at workers, namely, allowing a four-day week for parents with children under one or two years old or for workers older than 50 years old, for example.

The authors also point to incentives at the sectoral level, namely the creation of tax incentives in sectors that agree to reduce working time.

On the legislative side, the suggestions include including provisions in the labor code that regulate the four-day week in its different forms, with the authors stressing that it is “crucial that this stage precedes the formulation of tax incentives” and that some of the companies interested in the project did not move forward due to the lack of an adequate legal framework.

Experimentation is another of the areas highlighted, with the authors highlighting the need for the pilot project to be maintained or expanded in the private sector and to move towards testing in large companies and a pilot in the public sector.

“The four-day week will probably occur at various speeds and will be materialized in different formats, in the various sectors”, highlights the document, noting that in those where there are recognized more advantages in adopting the four-day week, or more capacity to do so , “sectoral tests must be promoted”, a path in which unions must play a role in promoting tests in collective bargaining.