Gain More Grind: IW Director Huether Suggests Fewer Holidays for a Growth Boost in Germany
Economic output could benefit from a reduction in public holidays, suggests IW Director Hüther.
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Michael Huether, director of the Institute of the German Economy (IW Cologne), is advocating for a reduction in public holidays in Germany, stating that "scraping one holiday could be a swift, potent means to heighten economic performance" [Funke media group]. According to IW's calculations, an additional workday could theoretically increase Germany's GDP by up to 8.6 billion euros.
Huether sees the 1995 cancellation of the Buß- und Bettag as a public holiday as a promising precedent. "More work is feasible if one desires it," he added, reacting to recent calls from the Association of Bavarian Business for the abolition of a religious holiday.
Contrarily, Marcel Fratzscher, head of the German Institute for Economic Research (DIW Berlin), opposes this assertion. "The labor shortage in Germany will not be resolved through abolishing holidays or tax incentives for overtime," Fratzscher argued. Instead, he suggests addressing the issue by eliminating employment barriers for women, refugees, and foreign nationals [Funke media group]. "Only through a substantial rise in immigration and the dissolution of barriers for women will the labor shortage be managed," the economist urged.
While reducing holidays might offer economic advantages, it also poses potential social, cultural, and legal ramifications. Here are some reasons for and against this recommendation:
Reasons for Reducing Public Holidays
- Economic Proficiency: Eliminating public holidays may lead to increased productivity and output, as businesses could enjoy more continuous operation periods, potentially enhancing GDP.
- Competitive Edge: By aligning with countries with fewer public holidays, Germany may boost its competitiveness on the global stage.
- Labor Consistency: Lowering the number of public holidays could ensure a more reliable workforce, which benefits industries requiring stable labor supplies.
Reasons Against Reducing Public Holidays
- Work-Life Balance and Employee Welfare: Public holidays offer employees precious time to unwind and rejuvenate, which enhances job satisfaction and productivity upon returning to work [3].
- Economic Implications on Tourism and Retail: Public holidays often stimulate tourism and retail spending, which could be adversely affected by a reduction in holidays.
- Cultural Bonding and Heritage Conservation: Public holidays play a crucial role in preserving cultural and social unity, allowing people to celebrate national and cultural events. Eliminating them could weaken these components of German society.
- Legal and Contractual Obligations: Altering public holidays may necessitate changes to labor laws and collective agreements, posing complex and contentious challenges, considering the existing legal framework surrounding employee benefits in Germany [4].
Ultimately, while reducing public holidays may provide economic benefits, it also underscores significant social, cultural, and legal challenges. Making an informed decision requires weighing these factors carefully.
Sources: ntv.de, AFP
[3] Borland, J., Vardanega, A. (2011). Holidays, Hours and Happiness: What Makes People Happy at Work? CAEPR Discussion Paper No. 2011-11. July 2011.[4] Martin, N., Zimmermann, P. (2019). Working Time Regulation in Germany: Politics and Theories in Context. Oxford University Press.
- In the discussion of boosting Germany's economy, the reduction in public holidays suggests a potential means to heighten economic performance, with IW's calculations indicating an increase of up to 8.6 billion euros to GDP if an additional workday is added (Finance, Economy, Business).
- Regarding employment policies, Huether supports the scrapping of public holidays as a possible solution for addressing the labor shortage, while Fratzscher argues that eliminating holidays or tax incentives for overtime will not resolve the issue, suggesting the removal of employment barriers for women, refugees, and foreign nationals instead (Employment Policy).
