Bank holidays 'damage Britain' warning

The Centre for Economics and Business Research (CEBR) questions whether we need to have so many holidays, given the potential impact on a fragile economy.

Its report states: “The average employee in the UK working full time works 1647 hours a year. The average Korean works 2,191. Even the average US worker works more than we do at 1695 hours a year.

“Only in the decadent European economy do people  work shorter hours than in the UK.”

One of the reasons we work such short hours says the report is our bank holidays. In a regular year, there are eight bank holidays in England and Wales and 261 weekdays (Scotland has an extra day off – St Andrew’s).

It is argued bank holidays put  downward pressure on productivity.

The comment comes in the wake of Bank of England Governor Sir Mervyn King’s claims that celebrations for the Queen’s Diamond Jubilee could damage the economic recovery as the country enjoys an extra bank holiday.

The report adds: “Our rough and ready calculations show that if the eight regular bank holidays were cancelled in an average year, annual GDP would rise by about 1.3%, or  £19 billion.

“In a normal year, each  of the eight regular bank holidays will result in £2.3bn of forgone GDP (Gross Domestic Product). The two Easter bank holidays we are all enjoying come with a price tag of about £4.7bn.”

“But this is not a normal  year. With an economy  teetering on the brink of recession, there is a lot of slack  around and the productivity lost over Easter will probably be made up at other times in the year.

“Though with disposable incomes under threat, the additional spending this year is also probably scaled down from the usual level.”

The report concedes bank holidays – most companies award them, but some do not –  can have positive benefits for the economy.
“People often use bank holidays to spend money. For example, the Easter holidays are the peak time for spending on garden equipment and DIY. Those that gain are retail, wholesale, hotels and restaurants. These sectors account for about 14% of the economy.

“However, the sectors that lose from bank holidays  are offices, factories and construction sites. These sectors account for about 47% of the economy.”

Special one-off bank holidays, such as the forthcoming  Jubilee, weigh less heavily on the economy than the eight normal bank holidays, thanks to the benefits from tourism.

Nevertheless, these special  bank holidays still depress GDP, with estimates that the royal wedding last year cost  the UK £1.2bn or 0.08% of  GDP.

Yet, the major European countries don’t take any fewer bank holidays than Britain; Germany takes eight, France 11 and Italy has 13.

“In a normal year eight holidays is probably not too many,” says the CEBR report.

It adds: “Because people  took annual leave to bridge  over some of the holidays, business lost momentum and  this probably contributed to  the rather weak economic performance over the  year.

“The holidays could be  spaced out a bit better.”

Do we have too many bank holidays?

YES

Our position is that we have plenty of bank holidays.

£2.3 billion is higher than I have seen before, but the CEBR are a respected body so that sort of figure can't be dismissed.

There will be some people for whom bank holidays are a major source of income. Any of us who have been out at the DIY furniture stores this weekend will see how busy they are.

Pubs, restaurants, certain aspects of the leisure industry, they tend to do well over bank holiday weekends and they might have a contrary view, but of course tomorrow there will be a lot of office workers who are not going in and that means they are not doing work.

They are not selling anything, they are not making anything. Also they are not nipping out anywhere for a sandwich; they are not going on any other little errand around town so there is a wider economy around that, which will lose out. Whether or not there are too many, there certainly shouldn't be any more. Last year we had an extra one for the Royal wedding, which was sold to us as this great boost to the economy. Instead of handing out extra bank holidays at the drop of a hat, given the cost to the economy, we could maybe commemorate these significant days in a more imaginative way.

Colin Borland of the Federation of Small Businesses

NO

All holidays, and especially bank holidays, are important to any worker because they give them a break from work.

They allow them to rest and we would say that makes workers more productive.

It's also important in terms of the wider economy. While it may be that public holidays cause a loss of GDP to some sectors, in others they are a benefit.

For example, the Easter break is an important time for both the holiday industry and the tourist industry, when people are out spending money and contributing to the economy that way. Public holidays are a boom time for these sectors.

So on one hand it allows workers to take time away from their jobs and come back refreshed, and on the other it puts money into the economy because these people go out and spend.

We have to remember that the Working Time Directive is a piece of health and safety legislation, and it established the right to paid holidays for the first time. That was originally 20 days, but it was raised to 28 for employers to factor in eight bank holidays.

So it's not just the unions saying public holidays are important – it's something that comes from the government.

Alex McLuckie is senior organiser with the GMB union

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