Holidays Ain't the Answer: IMK Study Refutes Claim That Fewer Holidays Boost Economy
Fewer vacation days equate to increased economic expansion
Got your eyes set on one fewer holiday for a bigger economy? The Hans-Böckler Foundation, an institution close to labor unions, took a closer look and found that abolishing holidays doesn't necessarily lead to increased economic performance.
According to the Institute for Macroeconomics and Economic Research (IMK) of the Hans-Böckler Foundation, a study of cases where working holidays were abolished or newly introduced in Germany and states over the past 30 years revealed some unexpected findings. In approximately half of the cases, the economy performed better in states that retained or introduced working holidays.
IMK Director Sebastian Dullien isn't buying the 'fewer holidays, more growth' equation. He believes that it oversimplifies the nature of a modern working society.
Abolish This Holiday Mess?
The idea of working one extra day to bump up the GDP has been making the rounds. The President of the German Industry and Commerce Chamber (DIHK), Peter Adrian, suggested it while the IW Institute, an institution close to employers, estimated that an additional working day could add anywhere from 5 to 8.6 billion euros to the GDP.
Economist Monika Schnitzer and the President of the Munich Ifo Institute, Clemens Fuest, have also lent support to the idea of abolishing a holiday to finance crisis burdens or increase the labor supply.
Would You Take One for the Team?
To see how abolishing the Buß- und Bettag holiday in all states except Saxony affected the economy, the IMK took a look back at 1995. Contrary to the notion that 'fewer holidays = more economic performance,' the GDP in Saxony, which retained the holiday, grew stronger than in the rest of Germany that year.
A Tale of productivity and Recovery
The IMK explains that while the overall economic production depends on working hours, productivity and innovation play a crucial role as well. The researchers suggest that the lack of positive growth effects from fewer holidays might be due to reduced productivity from shorter recovery times.
It's also plausible that workers, facing high stress levels, might respond to a reduction in public holidays by decreasing their working hours in part-time positions or in other employment opportunities. This could partly explain the observed trends during the pandemic, where care workers reduced their working hours in response to high stress levels.
Moving Forward
While some economic analyses suggest small GDP gains from fewer holidays, comprehensive research and public sentiment indicate that abolishing holidays does not significantly boost economic growth in Germany. Holidays also play a role in bolstering consumption and social well-being, suggesting that a blanket removal could be detrimental.
With Germany's economic challenges up for debate, critics argue that simply increasing working hours or abolishing holidays won't address deeper economic issues. In other words, we might need more than a few extra working days to get this economy back on track.
- In light of the findings from the Institute for Macroeconomics and Economic Research (IMK), it might be more beneficial for the community to invest in vocational training, as a means to foster personal-finance and business growth, rather than solely focusing on abolishing holidays to increase economic performance.
- Given the IMK's study results and the potential negative impact on productivity and worker well-being, it would be prudent for policymakers to consider alternative methods, such as finance reforms or support for vocational training programs, to address economic challenges, rather than relying on the removal of holidays as a solution.
