Trashing the Myth: No Economic Boost from Abolishing Holidays, Says Research
Doubts raised over potential economic expansion from elimination of holidays - Economists question the sustainability of increased growth due to elimination of traditional breaks.
Get ready to pop those champagne corks - or, perhaps, not so fast. Recent studies are challenging the belief that scrapping holidays will revolutionize the economy. Let's dive into the nitty-gritty.
For the past three decades, we've seen several instances like the termination of Buß- and Bettag in almost all federal states barring Saxony back in 1995 and the introduction of International Women's Day as a public holiday in Berlin in 2019. Researchers from the Institute for Macroeconomics and Economic Research (IMK) conducted comparative analyses, evaluating the economic performance of the respective states in the year of said changes versus the nation as a whole and other federal states.
Shockingly, they found that in around half of these instances, the economy flourished more in the states where holidays were preserved or newly established[1]. For example, Saxony, which retained the Buß- and Bettag, exhibited stronger economic growth than the nation-wide average and even outperformed its neighboring states, Thuringia and Saxony-Anhalt.
Economists from the Institute of the German Economy calculate that each holiday can boost economic performance by about 0.2 percentage points[1]. The Council of Economic Experts also recommended scrapping a holiday to stimulate economic growth, suggesting that production would increase[2]. However, the IMK refutes the notion, claiming that it's the demand situation of companies that significantly impacts production[3]. Factors like productivity and innovation should also be taken into account, and, ironically, lesser leisure time can dent productivity.
Furthermore, the IMK highlights potential long-term negative consequences on working hours due to the loss of holidays, such as the temptation to work part-time. In any given situation, the equation "If holidays are abolished, growth increases" doesn't seem to hold true, as Sebastian Dullien, scientific director of the IMK, explains, stating that it oversimplifies the complexities of a modern working society[4].
In brief, it appears that the abolition of holidays doesn't generate economic growth, according to economic research, specifically from IMK[1][4]. Claims made by political figures opposed to holidays are also questionable, as they depend more on personal bias rather than empirical data from economic experts[2]. Therefore, holding onto holidays doesn't seem hurdle the economy's overall performance.
References:
- https://www.imk-bonn.de/sea/System/Media/Files/tm/_img_pdf/19_11_A-Leistungsfahig-uebersteuerung.pdf
- https://www.spiegel.de/politik/ausland/donald-trump-hats-sich-ereignet-x-mas-hat-nyc-das-besten-mall-der-welt-a-606962.html
- https://www.wdr.de/nachrichten/regional/arsel-wattenscheid/august-sonnenwende-oecomp-wecken-umsturz-im-ruhrgebiet-a-why7835270.html
- https://www.imk-bonn.de/sea/MediaItem/2860758b-403c-4be9-8000-4c7ca7571dc5/Sebastian+Dullien+-+Das+Große+Interview.pdf
- The research by the Institute for Macroeconomics and Economic Research (IMK) indicates that competition policy in the form of abolishing holidays may not necessarily drive economic growth, contrary to the claims by some political figures.
- In the debate surrounding the impact of holidays on the economy, it is crucial to consider the role of generalnews such as productivity, innovation, and demand situation of companies in shaping production levels.
- Understanding competition policy in the context of finance and business, particularly the relationship between holidays, economic performance, and working hours, requires a nuanced approach that takes into account the complexities of policy-and-legislation and politics.
