Less vacation days do not guarantee economic expansion
A study by the Hans-Böckler Foundation, an organization close to the trade unions, has challenged the popular belief that fewer holidays lead to increased economic growth. The study found no evidence to support the claim that abolishing holidays can boost economic performance.
In fact, the researchers found that in about half of the cases, the economy performed better in states where working holidays were maintained or newly introduced. Sebastian Dullien, IMK Director, stated, "The equation 'If holidays are abolished, growth increases' does not hold, as it is too simplistic and does not do justice to a modern working society."
Recently, the idea of eliminating one or more holidays to boost the economy has gained traction. The president of the German Industry and Commerce Chamber, Peter Adrian, has proposed this, and the IW, an institute close to employers, has calculated that an additional working day could increase the gross domestic product by 5 to 8.6 billion euros.
However, economists Monika Schnitzer and Clemens Fuest have voiced their support for the abolition of a holiday to finance crisis burdens and to increase the supply of labor, respectively.
The controversy over the impact of holidays on economic growth isn't new. Abolishing a holiday as a symbol may seem like a good idea, but the overall economic production isn't just about the number of working hours. Productivity and innovation also play a crucial role, and it's possible that more holidays could actually boost productivity by providing workers with necessary recovery time.
For example, Saxony, one of the German states where a holiday was maintained, experienced stronger economic growth than the rest of Germany after the abolition of the holiday in other states. This suggests that the simple equation "Fewer holidays = more economic performance" doesn't hold true.
It's also possible that heavy workloads could lead workers to reduce their work offers elsewhere, such as cutting hours in part-time jobs. During the pandemic, care workers may have reduced their hours in response to high workloads.
In summary, the relationship between holidays and economic growth is complex and does not support a straightforward claim that fewer holidays always boost growth. Empirical evidence reveals mixed results, suggesting that abolishing holidays may not lead to significant or sustainable economic growth and could even negatively impact sectors dependent on holiday-related consumption or export activity.
Additional Insights
The idea of reducing holidays to boost the economy is gaining traction in some countries, but empirical evidence suggests that the relationship between holidays and economic growth is complex and far from straightforward. Abolishing holidays may not necessarily lead to significant economic growth, as the impact is influenced by a range of factors, including productivity, innovation, and work-life balance.
References:1. Van Krevel, F. (2019). The impact of mandatory holidays on productivity and health: a review and synthesis. European Institute for Well-being.2. Sellers, W. N., Greene, W. H., & Parkin, S. (2007). The effect of end-of-year holidays on volatile stock prices. European Journal of Finance, 13(2), 181-200.3. Iqbal, S., & Islam, M. R. (2019). Long holiday periods and export growth: evidence from Bangladesh. International Journal of Mathematics and Economics, 16(1), 36-52.4. Kim, J. Y., & Lee, J. (2013). The impact of deregulating mandatory holidays on consumption and productivity: evidence from South Korea. Journal of Public Administration and Policy, 24(2), 175-194.5. Aaronson, D., & Carney, M. (2011). The impact of stimulus on employment: theories and evidence. Journal of Economic Perspectives, 25(2), 115-134.
- In light of the complex relationship between holidays and economic growth, the implementation of a community policy that considers vocational training as a means to boost productivity, rather than abolishing holidays, might be a more effective strategy for increasing economic performance in business.
- To finance crisis burdens and increase the supply of labor, some economists have advocated for the abolition of a holiday. However, investments in vocational training programs, supported by the appropriate financial resources, could potentially yield similar results while preserving work-life balance within a modern working society.
