gE Blog Series: The Cultural Difference Part 2 - How Do Bank Holidays Affect an Economy?
As discussed in yesterday’s introduction post, different cultures have very unique ways of doing business; from business dress, to conducting meetings, to even the customs surrounding deal-making. Each nation takes a unique approach to how many holidays they observe; this is a reflection of their distinctive culture and can affect their economy and business environment. In today’s fast-paced, ever-changing work environment, each day off means less output which in turn reflects potentially lost money. Days off are important for worker’s mental and physical health, but there needs to be a balance between productivity and a conducive work environment. The amount of bank holidays that a nation celebrates could be impacting the economy more than you think.
A study by the Economists at the Centre for Economic and Business Research (CEBR) reported that if the United Kingdom’s eight regular bank holidays were cancelled, it would result in an annual GDP rise of about 1.3% (£19 billion) for the nation. The report also noted that the impact of bank holidays on economic growth can be lessened if they are spread out throughout the year. Much of this is due to businesses “losing momentum” during a hiatus. The UK has a statutory minimum of 28 vacation days, more so than similar nations such as Poland (26), Switzerland (20), and the United States (15). Which countries have the least amount of days off? Canadians and the Chinese enjoy the least amount of vacation days with only a mandatory ten days out of the office per year. Striking a fine balance between giving employees time off, while not sacrificing productivity is crucial in supporting a growing economy.
It is important to note that many recreational businesses depend on holidays and weekends to drive their revenue. Consumers tend to spend more discretionary money during breaks and this contributes to the growth of so called “leisure” industries. One of these such industries that relies on vacations is the hospitality and travel industry. CEBR founder Douglas McWilliams said that these industries only account for about 15% of the UK economy, while 45% of the economy suffers during time off and the other 40% is relatively unaltered by the holidays. This increase in spending in certain parts of the economy undoubtedly does not make up for the loss in production for the majority of the economy.
Some nations are attempting to curb the negative impact on their economy by spreading out vacation days or even cutting official holidays. Changes, however, are not being met with open arms everywhere. Habits that have been around for decades are extremely difficult to give up. Do you think that it would be a good idea to cut the amount of national holidays? Or are they an essential part of a healthy work environment?