Yukonomist: The economics of a new holiday

Yukonomist Keith Halliday

The Yukon government has announced it will follow the federal government’s lead in declaring the National Day for Truth and Reconciliation on Sept. 30 a statutory holiday. This is a welcome addition to our official holidays since it publicly recognizes the importance of reconciliation for Yukoners.

Combined with National Indigenous Peoples Day in June, which was added to the calendar several years ago, we will soon have 11 statutory holidays in the Yukon.

The Yukon government did an unscientific online poll earlier this year where 66 per cent of responses were in favour of the new statutory holiday. Responders identifying as workers were 74 per cent in favour versus only 39 per cent for employers. Those identifying as Indigenous were 76 per cent in favour.

Fourteen per cent of those who identified as Indigenous also identified as business owners, but the government did not release that group’s point of view.

It’s interesting to ask why these responses are so mixed. Why aren’t 100 per cent of workers in favour of a paid holiday? And why not zero per cent of employers, who have to pay wages for a day when workers don’t work?

A Marxist would sigh at the lack of class solidarity in the Yukon.

But people are more complicated than just their economic interests would suggest.

Many have a sense that holidays are “bad” for the economy since people aren’t at work. However, the economics of holidays are more complicated.

Compare Germany and Canada, for example. According to the latest OECD data, the average Canadian worker clocks in 1,685 hours per year while the average German does 1,349 hours. Yet economic output per person in Germany is more than 10 per cent higher than in Canada.

Yes, that’s right. The average German works 336 fewer hours —- that’s six or seven hours a week less — but somehow they manage to produce more goods and services per person.

The story is similar with other advanced European countries. The average Swedish worker is on the job 1,444 hours a year, 241 hours less than their Canadian equivalent. Sweden’s output per person is 15 per cent higher.

Or try comparing Canada in 1870 to Canada today in terms of working hours and output. According to Our World in Data, the average Canadian worker clocked in 2,845 hours in 1870. That’s about 55 hours per week, and a reminder why the forty-hour work week was considered such an accomplishment back in the day. Since then, we work about 1,160 hours less per year — the equivalent of almost 30 weeks of 40-hour weeks — while producing about 20 times more output per person (adjusted for inflation).

As the cliché goes, it’s not the hours you put in but what you put in the hours.

Legendary economist John Maynard Keynes speculated in the 1930s that by 100 years in the future — around now — technological progress would enable workers to work just 15 hours per day and make as much money as they did in 1930.

He had the math right, but it turns out most workers choose to work well more than 15 hours a week and make more money.

Furthermore, economists are increasingly aware of the importance of the links between stress, mental health and both general well-being and economic productivity. Although Canadians work fewer hours and get more holidays than most US workers, we do poorly compared to other advanced countries. OECD data from 2017, before the recent Indigenous public holidays were factored in, show that the minimum number of days off for a Canadian worker was 19. This includes statutory holidays and minimum vacation. In Germany, it is 29 days and in Sweden 35.

Advocates for the four-day work week movement will tell you that more full days of rest make workers more productive when they are at work.

However, the big-picture economic view glosses over the stressful disruption that labour-intensive Yukon employers are undergoing these days. Facing intertwined housing and labour shortages, they need to pay higher wages to attract staff. And they need to work longer hours when staff are unavailable. This adds to costs. Meanwhile, competition from big chains and the internet means many cannot raise prices and pass these costs on to their customers.

On top of these stresses, two new public holidays and the proposed paid sick leave add more pressure. The impact of a paid holiday will make itself felt in different ways on different businesses. Some seasonal businesses will pay higher holiday wages and stay open. Some may close for the day and have one less business day to make profits to cover their annual fixed costs.

Many businesses are already responding to the labour shortages and higher wages by investing in automation. Robots don’t take holidays. The cost of the new holidays will encourage continued investment to be less reliant on human staff, whether that is advanced machinery, digital accounting systems or automated check-out kiosks.

Overall, the new public holidays are a good thing. But we should ask ourselves if the cost of these should be borne primarily by a small group of business owners. Especially if we keep talking about wanting to encourage the private sector and diversify the economy.

Perhaps, as part of the enabling legislation for the new holiday, the government could offer to pay the Employment Insurance, Pension and Workers Compensation portion of the holiday’s wage bill.

Keith Halliday is a Yukon economist, author of the Aurore of the Yukon youth adventure novels and co-host of the Klondike Gold Rush History podcast. He is a Ma Murray award-winner for best columnist.