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Tue, March 5, 2024

Cost Of Public Holidays To The Economy

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In the last one year, the government announced dozens of public holidays on its leadership’s sole discretion, beyond the predetermined list of the nation’s annual holidays. The government led by former Prime Minister KP Sharma Oli had substantially cut down the number of public holidays previously. However, the government that was formed after the Oli-led government and the successive incumbent government have followed a reverse trend by announcing additional public holidays which indicate a public pleasing move, but one that has actually gone against them. Ironically, instead of offering respite, people actually suffer due to delays in public service delivery due to unplanned holidays and there is an adverse impact on industrial output and development (project) works. Criticism has started growing with the government granting random holidays without valid reason. Illogical decisions like giving a public holiday to mourn for lost lives in a fatal Yeti Airline’s plane crash in Pokhara on January 15 is an example that was heavily criciticised. A plane carrying 72 passengers and crew members onboard crashed on January 15 when people were celebrating a national festival ‘Maghe Sankranti’ already a public holiday. The government, subsequently, announced a holiday on January 16 when the victim’s families were looking for the bodies of the deceased and there was an urgent need of intensified search and rescue operations. The Home Ministry was criticised for making an attempt to escape the questions being raised by the public regarding aviation safety and the search and rescue operations. Bhojraj Pokharel, a prominent member of the civil society, said the government’s decision to announce a public holiday the day after the plane crash was merely guided by an approach to show that the ‘government is acting’. “Government’s action would have better reflected on interventions for the safety of public transport including civil aviation,” he said, adding, “Just a few months back in December 2022, 17 individuals were killed and dozens were injured in a bus accident in Bethanchowk of Kavre but the government didn’t announce any public holiday. The government can’t treat such mishaps discriminatorily.” The government granted a public holiday on January 11, on the occasion of Prithvi Jayanti, the birth date of late King Prithvi Narayan Shah, who is credited for the unification of modern Nepal and was the first Shah king of the country. After the abolishment of monarchy in 2008, there had been no official celebration of Prithvi Jayanti. However, a coalition partner of the incumbent government, Rastriya Prajatantra Party, reportedly sought a national public holiday to mark Prithvi Jayanti as condition to support the coalition. Interestingly, Prime Minister Pushpa Kamal Dahal ‘Prachanda’ who comes from a political background that is against monarchy endorsed the idea to bring the party onboard while forming the government coalition. Considered to be a true fighter for Republic Nepal, Prime Minister Dahal compensated this compromise with Rastriya Prajatantra Party by announcing another national public holiday on February 13 on the occasion of ‘Civil War Day’ through a Cabinet decision on February 12. What has to be noted is that the Maoist insurgency has still not been recognised as a civil war officially despite their coercive attempts. Some of the prominent issues associated with transitional justice — investigation of enforced disappeared persons and justice to the victims are yet to be settled. In these circumstances, announcement of a public holiday is futile without any formal endorsement through a national consensus. Additional Holidays announced in last one year through Cabinet decisions 

Date

Holiday

February 2, 2022 Sonam Losar
March 3, 2022 Gyalpo Losar
April 10, 2022 Rama Navami
May 3, 2022 Eid al-Fitr
May 13, 2022 Local election
May 15, 2022 Execution of Saturday-Sunday (2 days in the weekend) holiday
June 6, 2022 Scrap of two days leave in the weekend
July 10, 2022 Bakra Eid/ Eid al-Adha
October 18, 2022 To pay tribute to centenarian cultural expert late Satya Mohan Joshi
November 20-21, 2022 Holidays for federal and provincial assembly elections
January 11, 2023 Prithvi Jayanti
January 16, 2023 To mourn those who lost their lives in the Pokhara air crash
February 13, 2023 Civil War Day
(Source: Ministry of Home Affairs)

Lag effects on the economy

Public holidays have both positive and negative lag effects on the economy depending on various factors. It is believed that holidays increase consumer spending as they have free time and may spend more on leisure activities, shopping, travel and tourism related activities like hospitality, food, transportation, and other logistics. This can be viewed as a positive effect on the economy as increased consumer spending can stimulate economic growth. On the flip side, excessive and random public holidays typically result in reduced productivity as many businesses, development and infrastructure projects and government agencies shut down or operate on reduced schedules. This can lead to reduced output and has a knock-on effect on the wider economy. Public holidays can also result in higher costs for businesses, particularly those in the hospitality and retail sectors as workers/labourers demand additional wages for working on holidays. Public holidays are linked to output loss in the economy. Economic output is the blend of labour, capital and entrepreneurship, according to Nara Bahadur Thapa, an economist and former Executive Director of Nepal Rastra Bank. He said, “Workers start seeking for additional leave along with public holiday to spend time with their families or to travel. This creates a knock-on effect on the economy.” Citing the example of infrastructure projects under construction, Thapa said, “If the government offers a random public holiday between working days, it might take another two to three days to get back the traction.” Thapa informed that the economic output loss due to a public holiday is huge. If economic activities are completely halted due to a nationwide strike, it costs a roughly Rs 7.87-billion-loss in a day considering the size of our gross domestic product (GDP) of Rs 4,851 billion. Though holidays could increase spending and consumption, the limited operation of industries, businesses and complete halt of public service might have roughly a loss of around Rs 3.5 billion to Rs 4 billion in a single day of public holiday as it is considered as a non-working day. Additional public holidays and the decision to grant leave on Saturdays and Sundays for three weeks might have had a loss of no less than Rs 50 billion last year. In May last year, the government randomly declared two days leave in a week, Saturdays and Sundays, as an initiative to reduce the consumption of petroleum products as the country’s import bill of petroleum products surged exponentially due to global price rise. There is no standard rule or benchmark for public holidays. Public holidays must be rationalised and well accepted with the country’s culture, history, values and international conventions. In Nepal, there is also a malpractice of granting public holiday by subnational government within their domain/jurisdiction on special occasions. While the country’s PM Dahal had recently urged top level bureaucrats to trim the number of public holidays citing excessive holidays cause ineffectiveness in public service delivery as well as adversely impact economic activities, he announced a public holiday on Civil War Day. This kind of haphazard decision making exposes a thin commitment towards governance reforms and public service delivery. READ ALSO:
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JANUARY 2024

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