14. The way to Prosperity is by working harder, not having more holidays
In 2000, hoping to reduce the high unemployment rates, the French government passed a law mandating a reduction in the workweek from 39 hours to 35 hours. The government had hoped that if France worked fewer hours, companies would have to hire more people. The law however, failed to lower the unemployment rate, and it was stuck at 10 percent.
The rise in labor costs had the predictable effect of reducing job creation while increasing the incentives for businesses to automate. In 2005, the French Assembly watered down that law.
Our attempt at holiday economics seems to be based on the same principles that there are a fixed number of hours to be worked, and by declaring more holidays, businesses would hire more people.
It was also envisioned that more holidays means more people can go out and spend. This was patterned after Japan. The Japanese, however, were overworked and had very high savings. A holiday would afford them rest, and would afford them to go out and spend, helping the economy. The problem is that the Filipinos don’t really have that much savings to spend on the first place.
This is the same as trying to benefit the worker by raising minimum wage. However, services like products follow the law of supply and demand -when prices are expensive, you buy less. When wages rise, businesses will hire less people. This attempt to subvert the law of supply and demand creates an insider/outsider problem. If you have work, you are better off, but if you are an outsider, ( no job), it actually lessens your chances of getting hired.
Declaring more holidays does not benefit the businesses nor the worker. You don’t grow the economy by working less. You grow it by increasing your productivity and working more.
May 20th, 2010 at 4:27 am
duh!
May 21st, 2010 at 9:07 am
I agree with you on the negative effects of the french model – but there is a value to our policy of holiday economics. also the principle of our holiday economics is different from the principle of the french model (which is not holiday economics by the way). the value of the philippines holiday economics is to boost domestic tourism and by all counts and together with the advent of budget travel, this has worked! specially in cebu where domestic tourism is alive and well. btw i like my long weekends. it helps me recover.
May 21st, 2010 at 10:27 pm
Thanks so much Dondi!
I will try to revise it.
The point about that article:
a.) the misperception that there is a fixed number of hours to be worked.
Thus,
If you have more holidays, or have shorter working hours, more people can work.
I like long weekends too, or I would not have been able to write this book. but I think most people don’t have work or enough work, and I guess the way to say this is that the people in the bottom will have more opportunities to work if the people at the top work harder, not less (grin)…