Might extra public holidays boost the economy?

A public holiday may seem to benefit families while harming productivity, but the reality is more complex, and an optimal number of days off may help the economy

The organisation of the global economy’s working days and hours is based primarily on Western inventions of the Gregorian calendar and time zones. This extends to the concept of the public holiday. The origin of the word ‘holiday’ in English is holy day, and each Sunday is designated a day of rest in line with Christian teaching.

Islamic tradition is rather different. The emphasis upon the week’s most holy day, Friday, is more upon congregational prayer than resting from work or trade. Historically In the Islamic World, there has not been the neat segregation between working days and days off that has been the practice in the West.

As economies have globalised, the differences have lessened. Most nations have between 10 and 20 public holidays a year. In Islamic countries this typically includes Eid al-Fitr and Eid al-Adha.

Much of the contemporary discussion around the benefits of public holidays are economic: are they good for businesses, consumers and social well-being? In an economy dominated by manufacturing, with limited consumer spending on tourism and leisure, the economic impact of additional public holidays would probably be negative; factories close for the day while the workers being paid stay at home.

In many modern economies, including Gulf states, the economic impact may be different – and may even be positive. The principal export earning industry in Qatar, for example, is oil and gas and these are highly profitable and efficient industries, that could accommodate a few more days off a year comfortably, the same with the Financial Sector. Meanwhile, there is a strategic push by the government to diversify economic activity, including domestic tourism. Given that per-capita income is relatively high, more time off is likely to have the effect of lowering savings rates and boosting consumer expenditure, including in domestic tourism, a sector identified as of strategic importance for growth.

Research studies offer a mixed picture regarding the macro-economic impact of public holidays. Some indicate that higher consumer spending in certain sectors – not only tourism but some retail sectors – more than offsets direct costs to other businesses. In addition, more time with family and friends can boost well-being and, indirectly, productivity and innovation. In different countries around the world there have been experiments with a four-day working week, with indications that they are popular with employees and do not appear to affect business performance negatively.

Other studies indicate that the economic costs of additional public holidays can outweigh the benefits. Even those advocating for more public holidays argue for a small additional number, perhaps just one more, acknowledging that there is an optimal level. The typical number of public holidays per year is around 10-15; Sri Lanka and India have the most, with over 20 each.

In Gulf states, in common with most countries, there are a handful of public holidays for reasons that are a mix of religious observance and commemoration of an historic event.

One option for Qatar is to add an additional day that has a theme around a certain activity, rather than commemorative in nature. The existing Sports Day, which takes place on the second Tuesday in February, has been successful in encouraging people to take part in sporting activities. It is held in one of the cooler seasons, which makes sense in terms of encouraging activity.

There is a long tradition throughout the world of boosting consumer retail activity around a themed day – such as Halloween in western countries, Valentine’s Day, and Single’s Day in China. These are not necessarily holidays, however. Typically a public holiday has a more formal national or religious theme. So there would be scope to expand the number of themed days that do constitute a holiday and which, like Sports Day in Qatar, are not necessarily geared towards retail activity but may be more focused on leisure activities or the family. Status as a public holiday can lend the air of a national festival, in which people come together in shared activities and perhaps get to make new friends. One feasible concept could be a Family Connect day, in which an extended family is encouraged to get together.

For any additional holiday, it might be a good idea to have the extra day mid-week, which would ensure that the additional consumer expenditure would take place within the country. If added to a weekend, many will take the opportunity for a short vacation abroad. It is advisable to arrange additional public holidays for the months of October to May, before the summer holidays and the hottest weather.

Work is important for well-being in life but for most people, including those who enjoy their career, family comes first. Some additional collective leisure time can be good for social relationships and may not harm economic productivity – or even produce a modest boost.