Reduced holiday count not guaranteed to increase economic growth
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You might've heard the buzz around axing that extra day off boosting the economy. But hold your horses, buddy! The Hans-Boeckler-Foundation, pals with trade unions, dug deep into this assumption in a study and, drumroll please, they found no strong evidence supporting the idea that scrapping holidays leads to increased economic output.
The folk at the Institute for Macroeconomics and Economic Research (IMK) of the Hans-Boeckler-Foundation reported that, in many cases, the economy tends to perform better in regions that continue or even introduce working holidays. So, the good old equation "less vacay time means more economic opportunity" is apparently too simplistic for our complex modern work world, according to IMK director Sebastian Dullien.
The Great Vacay Debate: Are We Ready to Sacrifice Our Time Off?
Lately, abolishing one or more holidays to boost economic performance has been a heated topic of discussion. Peter Adrian, the president of the German Industry and Commerce Chamber (DIHK), even proposed this idea. A study by the employer-friendly Institute of the German Economy (IW) suggests that an extra working day could jack up the gross domestic product by a staggering 5 to 8.6 billion euros.
Even Monika Schnitzer, an economist and head of the Council of Economic Experts, supported the idea of ditching a holiday in Deutschland to help fund crisis expenses. "Scrapping a holiday would make the perfect symbol," she said. In March, Clemens Fuest, the head of the Munich Ifo Institute, suggested nixing a holiday to "ramp up the labor supply."
The Majority Steadfast: Hold the Holidays, Thanks!
The IMK analyzed how scrapping the Buß- und Bettag holiday in practically all federal states except Saxony between 1995 and its impact on the economy. Contrary to popular belief, Saxony actually saw its GDP grow stronger in 1995 compared to the rest of Germany.
"Economically, the GDP grew by 3.4% on average nationwide, but a whopping 9.7% in Saxony," the IMK reported. The GDP in Saxony also outperformed its neighboring states, Saxony-Anhalt and Thuringia, which had abolished the holiday.
From a Productivity Perspective
The overall economic production depends not just on the number of working hours, but also on productivity and innovation, according to the IMK. They noted that reducing the recovery time may decrease productivity, which in turn could negatively impact economic growth.
It's likewise possible that overworked employees, in response to a holiday cancellation, might decide to cut back on job offers elsewhere by reducing working hours or taking on part-time positions. For instance, during the pandemic, care workers might have reduced their hours due to high stress levels.
Additional Context Insights:
Contrary to what the article suggests, there's no specific evidence in the study from the Hans-Boeckler-Foundation linking the abolishment of holidays to negative economic growth. In general, however, reducing or eliminating holidays may lead to burnout, decreased motivation, and potentially lower overall productivity, which could result in negative effects on economic growth, according to widely accepted research.
In light of the debate on forsaking holidays to boost the economy, the Institute for Macroeconomics and Economic Research (IMK) emphasizes the importance of community policy in vocational training, which could positively impact personal-finance and business by cultivating more skilled workers. Adequate vacation time, they argue, could ensure higher productivity, contributing to economic growth and success in the long run, rather than being counterproductive due to potential burnout among employees. Finance, hence, should consider investing in sustainable work practices, including vocational training and proper vacation allocation, to foster a thriving business environment.
