Director Hüther proposes a break in work schedule
Michael Huether, the boss at the Institute of the German Economy (IW Cologne), is championing for fewer vacation days in Germany. According to him, axing one holiday could quickly and effectively pump up the country's economy, potentially adding 8.6 billion euros to the GDP.
Huether recalls the abolishment of the Buß- und Bettag as a public holiday back in 1995 and says, "Yes, we can work more if we want to." His comments follow the Association of Bavarian Businesses' demand for scrapping a religious holiday this week.
On the flip side, Marcel Fratzscher, chief of the German Institute for Economic Research (DIW Berlin), has a different take. He doesn't believe nixing holidays or tax breaks for overtime will solve Germany's labor shortage. Instead, he proposes weeding out employment barriers for women, refugees, and other foreign workers to combat the labor shortage.
Pros and Cons of Scrapping Holidays
Advantages:
- Increased Productivity: Economic think tanks like the Ifo Institute argue that removing one public holiday could boost productivity and contribute around €8 billion annually to the German economy.
- Addressing Labor Crisis: Germany faces a substantial labor deficit that impacts infrastructure investments and military capabilities. Cutting public holidays could help partially alleviate the shortage.
- Avoiding Inflationary Pressures: With fewer workers, increased government spending on infrastructure and defense might trigger wage inflation, hurting other industries and raising prices. More workdays could prevent such bottlenecks and inflation.
- Enhancing Competitiveness: As Europe's largest economy confronting economic decline and workforce issues, increased workdays could enhance the nation's economic motion amid global competition.
Disadvantages:
- Employee Well-being: Public holidays provide essential time off for employees, promoting work-life balance, decreasing stress, and fostering job satisfaction. Overworking employees could lead to decreased productivity and morale.
- Beyond-Work Benefits: Public holidays bolster spending in tourism and retail, benefiting various sectors and the economy.
- Cultural Importance: Public holidays uphold social cohesion and cultural identity by showcasing shared traditions. Removing them could have negative social impacts.
- Regional Variation: Germany's public holiday days differ by state, with some regions like Bavaria having 13 holidays. Eliminating public holidays could face regional political resistance and disregard local traditions.
Conclusion
Reducing or eliminating public holidays in Germany might boost the economy by adding workdays, but it comes with potential consequences for employee well-being, social cohesion, and cultural identity. Balancing economic gains against social costs will be the crux of any debate on this matter, especially as Germany deals with strategic priorities around military development and infrastructure renewal in 2025.
- Rather than simply scrapping holidays, policymakers could consider revising the community policy to ensure that employees have adequate time off, while also implementing opportunities for increased productivity, such as finely tuned employment policies focused on flexibility and efficiency within the business sector.
- Furthermore, in the context of Germany grappling with a labor shortage, a judicious approach could involve harmonizing employment policies across states to minimize regional variations, while also focusing on removing barriers to employment for women, refugees, and other foreign workers, as this could have more significant and lasting benefits for the economy.
