Philippines' Economics of Excessive Vacation

♠ Posted by Emmanuel in , at 12/26/2010 07:35:00 PM
Is too much vacation bad? Working in academia right now, I must unreservedly state that one of its perks is having more free time once the semester is out. However, for the clock puncher / office slave classes, things are not as straightforward. Take the example of the Philippines. Inheriting a "hectic" holiday schedule from its colonial masters of manana the Spanish, things have gotten out of hand in recent years. In a bid to supposedly increase vacation trips and decrease disruptions due to holidays, it has had a habit of moving holidays that fall midweek to Fridays and Mondays.

However, the economic benefits of doing so are not clear. Indeed, industry voices and the president himself are looking to reduce the number of paid holidays to a more manageable 16 [!] days--still world-leading by any standard, though:
With less than two weeks left before Christmas this year, the Philippine government unveiled a holiday gift to its people: Friday would be day off to mark Christmas Eve, and a second public holiday, in honor of a national martyr, would be observed on Monday, Dec. 27.

The result was a windfall four-day weekend. But instead of invoking cheer, such surprises are increasingly being met with grumbles from Philippine business leaders, its president and even some of its heavily vacationed workers. The Dec. 12 holiday shuffle was part of a distinctly Philippine way of handing out and scheduling days off—offering many official vacation days, and often rearranging them at the last minute to fall on the nearest Friday or Monday.

The country's leaders have hoped the long weekends will encourage citizens to shop and travel, boosting retail sales and the local tourism industry. Former Philippine President Gloria Macapagal Arroyo embraced the strategy, dubbed "holiday economics," and was often photographed on long weekends kitted out in a wetsuit for some surfing, or visiting her home province [of Pampanga], north of Manila.
Not working out that way. First, disposable income is not high enough to encourage jaunts elsewhere in the Philippines during long weekends. Let's just say there isn't yet a habit of going around Europe on cheap Easyjet or Ryanair weekend trips:
The tourism industry in the Philippines accounts for 8% of total gross domestic product, compared with nearly double that in nearby Thailand, so shuffling and adding holidays to benefit the travel industry would have a relatively slight knock-on effect on the broader economy. Many Filipino workers don't earn enough to go off on lavish jaunts around the country anyway. The per capita income here averages under $2,000 a year. Even those with solid professional jobs struggle to make ends meet, and don't necessarily get paid on national holidays.
Second, all these paid holidays are, according to some, making the Philippines less attractive as a business destination compared to its neighbouring countries which get by on less R&R:
Fewer holidays could help stir more foreign interest in the economy. In a recent study, the Joint Foreign Chambers of Commerce warned that the number of holidays and their erratic timing dissuades some foreign companies from coming here. Under Philippine law, businesses have to double daily wages for those who work through the main public holidays, or pay up to 50% on other selected holidays. That is a powerful deterrent as lower-cost locations such as Bangladesh and Vietnam open up to the global economy.

Already, foreign direct investment is the lowest of the major Southeast Asian countries, totaling $1.95 billion in 2009 compared with $4.88 billion in Indonesia, $7.60 billion in Vietnam and $5.96 billion in Thailand.
Maybe too much vacation isn't good. But then again, I'm not exactly in a position to gripe, right?