John McDonnell has announced Labour will reduce the average working week to 32 hours within a decade if the party wins the next election.

“It’s not just about a fulfilling life at work, we should work to live, not live to work,” the shadow chancellor told the Labour Party conference in Brighton on Monday afternoon.

McDonnell said a Labour government would ensure people had a “shorter working week with no loss of pay”.

He also committed a Labour government to ending the “modern evil” of in-work poverty within its first term of office.

“As society got richer, we could spend fewer hours at work. But in recent decades progress has stalled and since the 1980s the link between increasing productivity and expanding free time has been broken. It’s time to put that right,” McDonnell said.

He also said Labour would end the opt-out from the European Working Time Directive, which currently allows British employers to ask employees to work over 48 hours a week.

McDonnell said the policy would be delivered through “legally binding” sector-by-sector agreements between employers and unions, to allow them to jointly decided the  best way to cut hours.

A new Working Time Commission, similar to the Low Pay Commission, would have the power to recommend to government moves to increase statutory leave entitlements “as quickly as possible without increasing unemployment”.

Aides said that increasing statutory paid annual leave – which is currently 28 days a year – was one way of getting to the 32-hour target, but it would rely mainly on agreements between managers and unions.

Insiders pointed to a recent deal between the Royal Mail and the CWU union,  which aims to cut workers’ hours from 39 hours a week to 35 hours, through  increased automation but no reduction in pay.

Labour pointed to research from the New Economics Foundation which found if the pre-1980 trend in the reduction of working time had continued, British workers would now be working just under 13% less than they do today – roughly in line with equivalent annual working hours in Germany.

 Frances O’Grady, the general secretary of the TUC, said it was “time for working people to share in the benefits of new technology”.

“That’s why unions have been arguing for less time at work, more time with family and friends and decent pay for everyone,” she said.

Laura Parker, the national coordinator of the pro-Jeremy Corbyn Momentum campaign group, also welcomed the 32-hour week commitment .

“Policy is being written by the movement, with members and the leadership working hand in hand to write the next manifesto and deliver the ambitious, radical policies we need to win the next election,” she said.