Monday, 9 April 2012

What Do Bank Holidays Mean For The Economy?

by Viva Avasthi

The biggest economics-related news for the UK today has been that bank holidays are costing the British economy about £2.3 billion ($3.7 billion) per day. The Centre for Economics and Business Research (CEBR) has suggested that bank holidays should be more evenly distributed throughout the year to stop businesses "losing momentum".

There has been a very mixed response to this by the British public as I have discovered by reading some comments on the BBC site under this article:

My question: is there a correlation between the success of a country and the number of bank holidays it has? If not, what could be the reasons for such a large loss for the economy? 

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The charts below are the lists of the world's 10 biggest economies and the comparison of bank holidays provided in various selected countries:

World's 10 biggest economies

  • US
  • China
  • Japan
  • Germany
  • France
  • UK
  • Brazil
  • Italy
  • Russia
  • Canada
Source: Business Insider, IMF 2011

Comparison of public holiday entitlement

Selected countriesMinimum number of days
Japan, South Korea
Spain, Malta
Portugal, Austria
Greece, South Africa
France, Italy, Brazil, New Zealand
Australia, Finland, Norway, Belgium, US
Canada, Ireland, Germany
UK, Netherlands
Evidently, the biggest economies of the world aren't scrapping bank holidays. I don't know about you, but I can't find any clear relation between these two tables. It seems that the number of bank holidays a country has is not really a factor that individually affects the economy. Presumably other factors have to be accounted for such as: hours worked per year; how the bank holidays themselves are used by the public and what type of economy it is.

Although working hours in the UK are some of the longest in Europe, on the global perspective, this is not the case. Daniel Solomon, of the Centre for Economics and Business Research (CEBR), highlighted that the average British employee works 1,647 hours every year - a small amount when compared to the 2,191 hours worked by an average Korean. He said:
 "One of the reasons why we work such short hours is our bank holidays." 
Mr Solomon's argument becomes invalid when you refer to the table above and see that Korea is a country with far more bank holidays than ours (just compare their 15 to our 8). So the fact that they work for longer in Korea can't be because of their number of bank holidays - they have far more than we in the UK do! Personally, I don't think that bank holidays are the biggest reason why we don't work as many hours as other countries. 

Surely, if we are just looking at the amount of hours wasted, the eight days of bank holiday couldn't impact the economy as much as the three weeks of paid leave which employers in the UK are legally required to provide. In the US, for example, there is no mandatory paid leave and people work for longer there. It certainly reflects on their status as the world's largest economy (although we will probably be seeing a shift soon).

If you're interested in how hard countries work comparatively, here's the link to a presentation by entitled The World's Hardest Working Nations.
The UK, by the way, doesn't feature. I wonder how many of you are surprised?

Personally, I feel that there are far bigger problems for the economy than just bank holidays. Yes, it makes sense to space bank holidays more evenly, but problems such as too-short working days and too-high minimum wages are far too big to be overlooked. Especially when solving them could mean that smaller things such as bank holidays would stop being issues in the future.

Any opinions? I'm looking forward to reading your views and ideas on the matter. Comment below and share your thoughts! 


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