New Report: Shorter Work Hours Could Hinder Swedish Innovation
Sweden is undergoing a major technological shift in which competition for talent and investment is intensifying. In this situation, reducing working hours risks slowing down Swedish innovation and causing the jobs and investments of the future to end up in other countries. TechSverige’s new report, “Less Time for Innovation,” shows that a 35-hour workweek could reduce the tech industry’s output by nearly 34 billion kronor per year, with significant consequences for Sweden’s growth and competitiveness.
The tech industry accounts for nearly 8 percent of Sweden's GDP and about 11 percent of exports. At the same time, companies operate in a global market where competition for talent and investment is intensifying.
The report shows that Sweden already has the second-shortest average annual working hours among the world’s 20 largest exporters of IT services. At the same time, labor costs in the tech sector are 30 percent higher than the EU average.
– We are in the midst of a technological shift where competition for talent, investment, and the jobs of the future is intensifying. Tech companies need the right conditions to develop and grow here. Reducing working hours risks slowing the pace of innovation and causing investment and new jobs to go to other countries instead. This will have consequences for Sweden’s overall growth and competitiveness,” says Christina Ramm-Ericson, chief economist and head of economic policy at TechSverige.
According to the report’s calculations, a transition to a 35-hour workweek with no reduction in pay could, in the slightly longer term, result in an annual loss of production of nearly 34 billion kronor in the tech sector. This corresponds to 7.5 percent of the industry’s value added—the value that companies contribute to the economy. The report also highlights the risks of increased skills shortages, slower skills development, and longer time-to-market.
TechSverige does not view a general reduction in working hours as the right path forward. The most important thing right now—for Sweden, businesses, and employees—is to succeed in the increasingly fierce competition for innovation, investment, and jobs. We can best achieve this by investing in skills development, a good work environment, and flexible solutions tailored to the needs of businesses and employees.
– People should feel good and be able to grow throughout their entire working lives. The tech industry already offers great flexibility and good working conditions, and short-term sick leave is low. Now we need to continue developing sustainable workplaces with solutions that work locally. We need to strengthen both companies’ and employees’ ability to keep pace with rapid technological development and global competition in order to retain and create new jobs in Sweden. We should therefore prioritize skills development, innovation, and locally tailored solutions—not a general reduction in working hours,” says Einar Humlin, chief negotiator at TechSverige.
Read the report: Less Time for Innovation – The Cost of Reduced Working Hours to Swedish Tech and Sweden’s Competitiveness.