Reducing Working Hours in Peru: the Pros and Cons | Ius Laboris

The Covid-19 pandemic significantly accelerated the adoption of flexible work arrangements across regions and sectors, leading to a shift towards remote work, hybrid models, and greater autonomy for employees in managing their schedules.

While the real effectiveness of remote work is being increasingly questioned by some employers today, an off shoot of this has been a discussion around the reduction of the working day. In fact, this has become somewhat of a trend in Latin America with some countries in the region having already implemented reforms to shorten working hours (for example, Chile and Colombia), while others are beginning to explore this option (for example, Mexico and Peru).

Nevertheless, while the idea of reducing working hours is tempting in that it seeks to improve the overall well-being of employees, there are also potential factors and consequences that must be analysed before implementing this drastic change in the work structure. There is no doubt that in Peru, there will be an extensive debate on the real benefits and challenges of reducing the working day. Below, we explore three of the main pros and cons of this global trend.

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• Improves well-being and productivity: Pioneering initiatives in this area have shown that shorter working hours can lead to increased productivity, avoiding the exhaustion sometimes associated with long working hours. This is because employees, having more time to rest and relax, feel more motivated and less prone to burnout and tend to be more productive during the hours they are actually at work. This also attracts talent, especially from the younger generations of the labour market.

• Greater equality and family conciliation: Reducing the workday offers relief for employees, especially for women who often take on the household responsibilities or who manage single-parent households. Having more free time can allow them to spend more time with their family or improve their quality of life in general. In addition, it enables access to employment for groups that are otherwise excluded from the workforce because they are unable to work for the current 48-hour maximum working week in Peru due to the impact of other obligations.

• Decreased turnover and absenteeism: One of the main results of the initiatives implemented was a decrease in burnout which then subsequently impacted the reduction of turnover rates and absences due to medical issues linked to stress or occupational illnesses. This is beneficial for companies in terms of costs, talent retention and productivity.

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• Increased labour costs: While it is possible that reducing working hours could result in efficiency savings due to enhanced productivity, it could also involve a significant increase in costs. To maintain the level of production, it would be necessary to hire more staff, which generates an increase in the budget for salaries, operating costs and even training, thus becoming a barrier for companies that are otherwise struggling to stay in the market.

• Loss of competitiveness in international markets: In sectors where hiring costs are a critical factor, reducing working hours could make companies less competitive within international markets. Companies might need to hire more workers to maintain productivity levels, which could put them in an unfavourable position compared to global competitors that are more flexible when it comes to working hours (and who enjoy lower hiring costs as a result).

• Risk of increased job insecurity: While reduced working hours may seem like a flexible solution, in a context of high rates of informal employment (such as in Peru), it could lead to an increase in this informality. The precariousness of such employment relationships are not accompanied by adequate benefits or stability and increased job insecurity.

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It is clear from the above that seeking, through the reduction of working hours, a balance between increasing the well-being of workers – for example, by improving their quality of life and family conciliation – without sacrificing productivity or the competitiveness of the organisation in line with the demands of the globalised market, comes with significant challenges.

The debate around reducing working hours will undoubtedly continue, in Peru and elsewhere. Its viability will depend largely on the economic context of the country, the type of industry, the size of the company in question, as well as the willingness and cultural maturity of each organisation (leaders and workers) to maintain their real commitment to the objectives of competitiveness and productivity.

*Vinatea y Toyama