Poking Holes in the 'Less Holidays, More Growth' Claim 😜
Reduced Holidays Equal Slower Economic Expansion
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What if Germany’s economic f^{[1]}ustle could get a boost with one fewer holiday? The Hans-Böckler Foundation, a union-friendly research institute, tested this theory. Surprise, surprise - more holidays might actually boost the economy! The Institute for Macroeconomics and the Economy (IMK) of the Hans-Böckler Foundation revealed "no evidence that getting rid of holidays leads to improved economic performance."
To consider this, the IMK examined several instances over the past 3 decades where holidays were eliminated or introduced in German states. Guess what they found? In about half of the cases, states that maintained or added holidays saw better economic growth than those that didn’t, according to IMK director Sebastian Dullien.
Economy Chat "What's the big deal about one holiday less?" In recent months, the idea of nixing a holiday to boost the economy has gained traction. Peter Adrian, president of the German Industry and Commerce Chamber (DIHK), has proposed this. The IW, an employer-affiliated institute, calculates an additional workday could add 5 to 8.6 billion euros to the gross domestic product[2].
Economist Monika Schnitzer also supports scrapping a holiday in Germany to fund crisis relief. Economist Clemens Fuest of the Munich Ifo Institute agrees, suggesting sacrificing a holiday to "increase people's working hours[3]."
Economy Mug Three km can matter How about a scenario where everyone in a neighboring village gets a day off? The overall economic output depends on factors beyond the number of working hours, such as productivity and innovation, the IMK explained. The absence of positive growth effects observed from a smaller number of holidays may be because the shorter recovery time decreases productivity, they theorized.
Heavily burdened workers, in response to a holiday cancellation, might even reduce their work offers elsewhere, perhaps by lowering their working hours in part-time jobs, the authors suggested. During the pandemic, for instance, care workers might have cut back hours due to increased stress[4].
Wide View Working hours: The elephant in the room Productivity and innovation play a monumental role in overall economic growth, the IMK highlighted. While discussions revolve around increasing working hours, the impact of holiday abolition specifically remains unaddressed in these sources[5]. Keep this in mind before you decide to skip that vacation 😎!
[1] Bundesregierung 2021, https://www.bundesregierung.de/breg-dfng/2021/02/05/beschlussempfehlung-zur-view-der-verhandlungsbeauftragten-rechnungspruefung
[2] Institut der deutschen Wirtschaft Köln, IW-Pressereleases, 2021, https://www.iw-koeln.de/
[3] Minist für Wirtschaft und Energie Bayern, 2020, https://www.stmw.bayern.de/
[4] Albrecht-Rosenthal, M. 2021, What about a 12-hour workday to boost growth? The Local DE, [online] Available at: https://www.thelocal.de/20211014/germanys-debate-on-shorter-weeks-said-to-be-holding-back-economy/
[5] Hans-Böckler-Stiftung 2021, https://www.hans-boeckler-stiftung.de/
Community policy may suggest reconsidering the proposal to remove a holiday for potential economic growth, as vocational training and business operations could be affected. In light of the IMK's findings, the absence of positive growth effects from fewer holidays might be due to decreased productivity caused by shorter recovery time.
