Spain has taken a significant step toward improving work-life balance by approving a draft law to reduce the maximum weekly working hours from 40 to 37,5 without lowering salaries. This reform aims to enhance job quality, increase productivity, and promote a more equitable labour market. However, it also presents challenges for businesses and the broader economy.
A Reform for Better Work-Life Balance
For full-time employees, the reduction in working hours is a major benefit, allowing for more personal time while maintaining salaries. This could lead to improved mental well-being, reduced stress, and stronger family and social relationships. By keeping wages unchanged, the reform effectively increases the value of each working hour, potentially boosting household income and consumer spending.
Part-time employees, who make up around two million of Spain’s workforce, may also benefit. Many could see their contracts upgraded to full-time positions, improving job stability. Since women hold approximately 75% of part-time jobs, this measure could contribute to reducing the gender employment gap.
Industries and Sectors Most Affected
Sectors with traditionally long working hours, such as agriculture, manufacturing, construction, and transportation, will see the most significant impact. According to Spain’s Labour Force Survey (EPA), many employees in these industries exceed the current 40-hour limit, making them key beneficiaries of the reform.
In contrast, public administration and education, where employees often work fewer than 37,5 hours per week, will experience minimal changes. These sectors may already align with the new legislation without requiring major adjustments.
Despite its social benefits, the reform presents financial and operational challenges for businesses, particularly small and medium-sized enterprises (SMEs). With employees working fewer hours while maintaining salaries, labour costs are expected to rise. SMEs, which often operate with tight profit margins, may struggle to adapt without increasing prices or reducing staff.
However, the shorter work weeks can lead to increased productivity and lower absences. Companies that optimize their workflows may see performance improvements that offset some of the added costs. Additionally, sectors with long shifts—such as retail, hospitality, and healthcare—may need to hire additional employees to compensate for the reduced hours, potentially leading to job creation.
Advantages and Disadvantages of Reducing Working Hours for both employees and employers
For Employees:
Advantages:
- Improved work-life balance, reducing stress and enhancing well-being.
- Higher productivity, as shorter workweeks often lead to greater efficiency and focus.
- Better mental and physical health, with reduced burnout and workplace stress.
- Increased job satisfaction and motivation.
- More opportunities for part-time workers (primarily women) to gain full-time employment.
Challenges:
- Increased workload, as employers may expect higher daily output.
- Reduced overtime opportunities, potentially impacting employees who rely on extra pay.
- Risk of job cuts if companies reduce their workforce to maintain profitability.
For Employers:
Advantages:
- Higher productivity, as focused employees complete tasks more efficiently.
- Lower absenteeism, with fewer sick leaves and burnout-related absences.
- Improved employee retention and job satisfaction, reducing turnover rates.
- Enhanced company reputation, attracting top talent.
Challenges:
- Higher labour costs, with employees earning the same wages for fewer hours.
- Operational challenges, particularly in industries with long shifts.
- Potential price increases as businesses adjust to higher labour expenses.
The Road Ahead
The transition to a 37,5-hour workweek will take time. Collective agreements that currently stipulate longer workweeks must align with the new regulation by 31st of December 2025. Before becoming law, the draft bill will undergo review by the Council of State and the Economic and Social Council of Spain before returning to the Council of Ministers for final approval. It will then be debated in the Spanish Congress, where amendments may be introduced.
If managed effectively, Spain’s reduced workweek could lead to a healthier workforce, greater job satisfaction, and potentially higher productivity. However, businesses will need to adapt carefully, and government’s support will play a crucial role in ensuring a smooth transition. Whether this reform becomes a model for work-life balance or a challenge for economic stability will depend on how Spain navigates its implementation.
