Hey there! No Holidays Ahead for Germany's Economic Boost, Says Study
Elimination of public holidays fails to boost the economy
Ready to break some habits? A report by the Institute for Macroeconomics and the Economy (IMK) of the Hans-Boeckler-Foundation brings us some intriguing findings - the abolition of holidays won't bring a growth spurt to the German economy!
The researchers looked at specific instances from the past three decades, such as the 1995 scrapping of the Buß- and Bettag in almost all federal states and the introduction of International Women's Day as a holiday in Berlin in 2019.
What's fascinating is that, in 1995, Saxony, the only state that kept the Buß- and Bettag, saw its gross domestic product (GDP) grow stronger than the rest of Germany. Saxony's nominal GDP grew by a whopping 9.7 percent compared to the national average of 3.4 percent. That's a solid 3.7 percentage points ahead of Saxony-Anhalt and Thuringia, which nixed the holiday!
Fast-forward to 2019, and even Berlin recorded a higher economic growth rate (2-percentage points) than the national average after introducing International Women's Day as a holiday.
But why, you ask? Well, the flexibility in our modern economy plays a significant role. Companies tweak their order processing to avoid holidays, leading to overtime pay. There's uncertainty whether more goods would be produced annually without these holidays or if production would simply shift.
The IMK team asserts that, in spite of the buzz about labor shortages, the demand situation of companies remains the crucial factor for production. As Sebastian Dullien, IMK's scientific director, puts it, "The equation 'If holidays are abolished, growth increases' is too simple and fails to capture the richness of a modern working society." Dullien further stated, "Therefore, demanding such a step to encourage growth isn't rational."
So there you have it! Ditching those holidays might not be the key to Germany's economic growth after all. It's all about optimizing production within the existing demand situation.
[1] Source: Enrichment Data (IMK)
- In light of the study by the Institute for Macroeconomics and the Economy (IMK), it might be more beneficial for Germany's economic growth to focus on community policies such as vocational training, rather than abolishing holidays, as the flexibility in the modern economy can lead to overtime pay and production shifts.
- To encourage economic growth, financial strategies that align with current business demands, such as investing in vocational training programs, might be more effective than solely focusing on restructuring holidays.
