Think-tank: One less holiday day would be a boon to economy

One less day at the summerhouse per year would have almost the same impact as the cumulative effects of recent major reforms, Kraka says

If we were all to take one less day of holiday per year, the economic impact would be so great that it could cancel out the need for the various reforms to the welfare system. 


That is the conclusion of an analysis done by the think-tank Kraka for Politiken newspaper. 


The analysis concludes that if all working Danes took one less holiday day per year, it would result in an extra two billion kroner annually in the public coffers, an annual GDP increase of six billion kroner and an increase of labour output equal to an additional 10,000 workers. 


Kraka calculates that removing one day of holiday would have nearly the same impact as the combined effect of the numerous reforms pushed through in recent years. The analysis shows that the government's growth and jobs plan, the reform of the student grant system and the reform of the unemployment benefit kontanthjælp will produce a combined increased labour output equal to 11,000 workers by 2040 – just marginally more than what could be achieved by spending one less day at the summerhouse. 


"Shorter holidays will increase working time, and increased working time will lead to higher production that will benefit the Danish economy and the public sector's finances," Kraka's head of research, Esben Anton Schultz, told Politiken. "In a time when we are discussing ways to increase our labour output, it is of course relevant to take a look at our holiday, which when viewed in an international context is quite long."


According to a report from the American think-tank Center for Economic and Policy Research, Denmark ranks third among the world's 21 richest countries when it comes to long holidays. With 25 days of guaranteed holiday, Denmark trails only France's 30 days and the UK's 28 days. 


Peder J Pedersen, an economy professor and a member of the government's labour market commission, warned however that the impact of removing one day of holiday may not be as simple as it sounds. 


"There is no doubt that it would have a positive effect, but the magnitude of it and the amount of time it would take to actually impact the economy are obviously not clear," he told Politiken.  


Kraka's Schultz also acknowledged that the concrete effects could be hard to measure and that one less holiday day could be cancelled out by workers taking extra ill days to compensate for their lost holiday. 


A spokesperson for the national employers’ union, Dansk Arbejdsgiverforening, said that what was important was increasing national productivity and not necessarily the method in which we get there.  


"Generally speaking, we want to increase labour output because it will strengthen the competitiveness of Danish workplaces," Jonas Zielke Schaarup told Politiken. "That can be achieved through labour market reforms and through increased work hours. Whether the work hours are increased via less holiday or through expanding the work week is really less important in the big picture."


The labour confederation LO, which represents 18 different labour unions and more than one million workers, didn't rule out the need to eventually decrease holiday time. 


"In the long-run, there could very well be a need for further initiatives that increase the collective labour output, and a shortening of the legally-guaranteed holiday could be a something to look at," LO's head economist Jan Kæraa Rasmussen told Politiken. "But with the current projections for the labour market through 2020, it is not a relevant step." 


Last year, Danish workers nearly lost an official day off when negotiations on getting rid of Great Prayer Day (Store Bededag, which is the fourth Friday after Easter), and either Holy Thursday (skærtorsdag, the day before Good Friday) or Whit Monday (2. Pinsedag, the Monday after the seventh Sunday after Easter) went down to the wire. Eventually, the unions refused the proposal and the holidays were saved.