The Economics of Public Holidays

As of today we are 5.4% into the year 2022 and I’m still recovering from the festive season. It’s been a “hungry January” as I like to call it and there’s still many days until February, hang in there guys! While the holidays are still fresh in our memories, it’s worth looking at how holidays work. Having a look at the result that is a hungry January, it’s important to see how we got to the point where it feels like January is 50 days long and the road to pay day is never ending.

What’s the point of a Public Holiday?

According to the Cambridge Dictionary, a public holiday is a day when most people in a country do not have to work. It’s a day established by law that has historical or cultural importance to a country. The reason being that instead of going to work or school, we reflect on an event that shaped our countries independence. A day to remember that our ancestors fought and sacrificed to ensure the future generation lives in a better country.

Fewer Days- increase in productivity

Like most people (me included) a national holiday is used for sleeping half the day and indulging in vapid entertainment the rest of it. With this said, I can’t help but feel less public holidays will actually boost economic activity in the country, since there would be fewer days for the economy to shut down. This will therefore lead to labour productivity not tanking on these days. What got me thinking in this manner is how the two biggest economies (China and the USA’s) approach holidays and productivity.

China has amongst the fewest public holidays in the world with only 7 days out of the whole year being recognized. Their notorious 996 work hour system requires employees to work from 9:00 am to 9:00 pm for 6 days a week. In other words, working for 72-hour week vs the standard 45 hour a week. The United States of America on the other hand has no national requirement for paid holidays vacation or sick days. Therefore 23% of Americans are forced to work when businesses are open since they don’t have paid holidays.

By direct comparison Namibia has 20 paid vacations days (in a five-day workweek). According to the ILO (International Labour Organization) every employee is entitled to at least four consecutive weeks annual leave in respect of each annual leave cycle (which means the period of 12 consecutive months employment with the same employer immediately following an employee`s commencement of employment or the completion of the last annual leave cycle).

More Public holidays- boost consumer spending

For the case of less public holidays, I have given some extreme cases but I still lean towards that side if it means people can earn a higher wage/salary. The case for more public holidays is also compelling. Reports in the UK have argued for more public holidays with data illustrating the positive relationship between public holidays and consumer spending. Barclaycard (a part of Barclays Bank PLC) reported consumer spending drops 26.7% due to there being no public holidays in May. Another article using the same data argues had their been those 2 important public holidays as was always the case, people would been travelling and spending money in supermarkets.

More public holidays- Increase in leisure time

Another reason for wanting more public holidays is because there’s more time for leisure. It sounds like a stretch but there’s sound logic to it. Studies such as Keeping in Touch: A Benefit of Public Holidays have argued for more public holidays because it means there’s more time to keep in touch with people. Having no public holidays would mean having to do all your socializing on the weekends, which would be tough. In this sense the extra time public holidays gives us can be quantified.

Thinking about how valuable time is, we are willing to pay people to do the things we don’t want to do. This ensures we can have time for our own leisure activities. For example paying someone for doing your laundry etc. So you can agree time is currency and when you pay someone you’re just swapping one currency for the other.

So, what’s the solution?

Looking at holidays as a concept, assessing what it symbolizes, its impact on our individual lives and the economy, it’s worth trying to change holidays in a way that truly benefits us all. So as to solving January’s problem, the answer is there is no easy answer. The answer varies from person to person. What do you value more, your time or money? Yes I’m sitting on the fence, so anti-climatic I know. As much I love the idea of being a busy bee, I’m the same person who would want 30 hours in a day & an extra day during the weekend. Hungry January will always be a thing, now and forever.

What do y’all think?

For a full economic analysis on the impact of national holidays on economic activity, a read through of The Impact of National Holidays on Economic Activity: Evidence from Italy by Francesco Esposito is recommended. For a deeper reading on the economics of public holidays, a link for the textbook Are Europeans Lazy? Or Americans Crazy? by Michael C. Burda etc. is included.