The cost of a bank holiday

Another Monday, another bank holiday. But at what cost?

When UK workers were granted an additional day off work in 2012 for the Queen’s Diamond Jubilee, reports suggested that it cost the economy up to £2.3bn.And with Britain and the US being the only Western countries celebrating public holidays this coming Monday (May 26th) – the US celebrate Memorial Day on the last Monday of May – exchanges around the world can expect a rather slower day of trading.

This once again begs the questions whether in today’s era of global business and 24-hour connectivity, can we continue to afford public holidays – or, at least, as many of them?

Two years ago, Douglas Williams of the Centre for Economics and Business Research in the UK told the BBC that roughly 45% of the economy suffers on a bank holiday. And with four bank holidays bunched together in the space of roughly month, businesses can lose so much momentum that it never seems to regain over the course of the year, according to Williams.

From economic point of view, however, the UK gets off lighter than most. In fact, the UK has the fewest bank holidays of all countries in the G20 – with holidays almost always falling on a Monday or Friday. This reduces the chance of additional disruptions casued by workers taking extended weekends.

In France, on the other hand, all three public holidays this May have fallen on a Thursday, with workers doing the practical thing of booking an additional day off on the Friday to enjoy an extended weekend. Europe 1 radio estimate that these extended weekends, known in France as ponts (bridges), have cost the French economy around €4bn.

It is important to note that these numbers are merely estimates and that the true economic cost of an entire country enjoying a day off is very difficult, if not virtually impossible, to quantify. From a domestic perspective, for example, how much spending is genuinely lost and how much is merely delayed.

Internationally, however, shutting down stock exchanges does lead to a permanent loss of economic gain. Asia and the rest of Europe are not going to twiddle their thumbs while Brits and Americans enjoy a day of recreation.

We are certainly not suggesting that the economic situation in the UK is so dire that these additional days off should be cancelled altogether. (By contrast, Portugal did just that last year as a means of cutting costs). Nor are we suggesting that employees who often do business with partners in other continents and timezones should spend the day glued to their mobiles; that would defeat the entire purpose of a holiday in the first place.

So how do you keep everyone happy?

Instead of fixed holidays, what if a percentage of the UK’s eight annual bank holidays were granted to workers as additional holidays, free to take when they please? Employees would have more flexibility while the country’s economy would not need to face the same burden year-on-year.

Food for thought – while you are spending your Monday fixing up the garden, visiting a museum or enjoying a few pints down the pub.