Bank holidays: how a day off work affects the economy
Dyma erthygl yn Saesneg gan Dr Edward T Jones, darlithydd mewn Economeg, sydd yn cael ei hail gyhoeddi o'r gwreiddiol ar dudalen The Conversation ar ein tudalen Saesneg o dan drwydded Creative Commons. Mae The Conversation yn safle sy’n galluogi academyddion i ysgrifennu’n uniongyrchol er mwyn rhannu eu harbenigedd gyda’r cyhoedd. Darllenwch yr erthygl wreiddiol.
Don’t bank on it
Central to the question of if bank holidays boost economics is whether the benefit of increased consumer spending outweighs the loss of productivity by letting employees off work.
Sectors like tourism and hospitality would be expected to benefit more than industries such as construction or finance, for example. So more bank holidays would make sense where tourism is a significant part of the economy. In England and Wales, the counties of Cornwall and Pembrokeshire for example, would gain more financially from an extra bank holiday than other areas.
But there are other dividends to consider too. Bank holidays enable people to take a day off work to enjoy hobbies, take trips, or get together with family and friends. They have a positive impact on staff morale and workers in other sectors are typically more productive the day after a bank holiday because they feel rested and relaxed.
There will be some businesses though, who have struggled over the pandemic and are badly placed financially to absorb another day when they might have to pay staff for not working. There is also the loss of productivity from people who get the day off.
So there are compelling economic arguments for and against more bank holidays. Whether or not there is an optimal number depends on the industrial mix of the economy. Those with a great variety of tourist destinations for domestic tourism or where households’ disposable income is high, should probably have more. And while tourism plays an important role in many British regions, the economic benefits may be limited in the short-term as household incomes are squeezed tighter by higher inflation.
The UK government is perhaps understandably cautious, with a spokesman explaining that each bank holiday “presents a considerable and significant cost to our economy and therefore each proposal would have to be considered carefully on that basis”. (Although there is research which suggests that the government overestimates the cost of a new bank holiday by 64%).
An extra bank holiday could indeed have an adverse impact on an economy that is already in a precarious situation as its struggles to bounce back from the pandemic and surging inflation reduces households’ real incomes. But given the stresses and strains of the last couple of years, an extra day off may be just what people need – regardless of the economic cost.
