Undercover Economist

Should we introduce obligatory holidays?

The UK election has thrown up an intriguing idea. In a modern twist on the old offer of bread and circuses, Jeremy Corbyn’s Labour party has proposed four new public holidays — nearly a full working week’s worth. Since England and Wales currently have only eight such holidays, it would be a dramatic expansion in mandatory fun.

I like a holiday as much as the person in the next deckchair, but such days off are not costless. As any freelancer can attest, if you work less you earn less. Having a steady job with a monthly salary will hide that cost, but it’s going to pop up somewhere. Perhaps workers will receive lower pay rises. Or perhaps jobs will be lost. (Robots demand no holidays.)

But maybe these holidays would pay for themselves. A popular conceit is that many of us work inefficiently long hours, and that more vacations or shorter shifts would actually raise productivity. We can call this the “work smarter, not harder” theory of labour.

Exhibit A: The French. We British scoff at the French work ethic of four-day weekends and four-hour lunches, but the joke is on us, since the French get more done in less time. Nor are the French unique in this respect. Broadly speaking, countries with a culture of long hours are also countries with a record of low productivity per hour. According to the OECD, the Paris-based club of mostly rich nations, the longest hours in Europe are worked in Greece, closely followed by Poland, Latvia and Portugal. At the other end of the spectrum are the Danes, Dutch, Norwegians and French. Laziest of all? The Germans.

The most likely explanation for this pattern is that people in richer nations can afford the luxury of working fewer hours per year. But it’s tempting to speculate that causation runs the other way, and that short shifts and long breaks are a route to high productivity. No wonder that from time to time some think-tank or pundit proposes a six-hour working day — or a pilot scheme goes well and gets some buzz. On the face of it, it is not absurd to suggest that the British could enhance their lacklustre productivity by taking a few extra days off.

But there is an obvious objection to the idea. If a four-day week is just as productive as a five-day week, or a six-hour day beats an eight-hour day, then why don’t more employers embrace shorter hours? If it was such a good idea there would be no need for the government to impose it on anyone. It’s not impossible that the Labour party knows more than British managers about how best to run British businesses, but nor is it likely.

There is an alternative argument for the government to introduce more holidays: the hockey helmet problem. Nobel laureate economist Thomas Schelling pointed out in his 1978 book Micromotives and Macrobehavior (US) (UK) that ice hockey pros wouldn’t voluntarily wear helmets, despite the risk of horrendous injuries, because the helmets reduced visibility and put them at a disadvantage. Yet many were happy when the helmets became compulsory, offering safety without a loss of competitive edge.

Perhaps public holidays are like hockey helmets — we could usefully take time off but dare not, for fear of losing ground on our rivals. In 1998, economists Sara Solnick and David Hemenway surveyed Harvard students and found they would rather have $50,000 in a society where others were poorer than $100,000 in a society where others were richer. Students felt that money was a positional good, where what mattered was not how rich you were, but whether you were richer than others.

The Solnick/Hemenway study reached different conclusions about vacation time. The positional view — that what really matters is not how long your holiday is, but that your holiday is longer than other people’s — seems absurd. But if we’re competitive about money but not competitive about holidays, no wonder we work hard. A mandatory holiday gives every rat in the rat race a chance to catch its breath.

Even if you believe this argument for obligatory holidays — I am not sure I do myself — a final question awaits any government bold enough to introduce them. Why name a particular date? Holidays are easier and cheaper to take if other people are still working. But the Labour proposal actively emphasises national unity: we’re all to take the day off at the same time. The Scots will holiday alongside the English on St George’s day while the English return the compliment with a holiday on St Andrew’s day. Well, it might work.

But perhaps we should use holidays not to unite us, but to keep us at a safe distance from each other. We could introduce a patchwork of new holidays. Remainers could go on mini-breaks to Paris every June 22, while the Brexiters would gather on the white cliffs of Dover with warm bitter and ploughman’s lunches each June 24. A similar system in the US would spare liberals and conservatives from having to talk to each other. It seems to be the way we’re all heading, anyway — and it would be much easier to get some space on the beach.

Written for and first published in the Financial Times on 28 April 2017.

My new book is “Fifty Things That Made The Modern Economy” – coming soon! If you want to get ahead of the curve you can pre-order in the US (slightly different title) or in the UK or through your local bookshop.

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