Happy Holidays?

29 Aug

Editor’s note: This article appeared on Sanggu’s Bantay Presidente 100 last August 17, 2010 and was co-authored by Bea Tanjangco (AB EC ’12) and Carlo Roman (AB EC-H ’12), AVP for Externals.

An economic good of high demand and low supply…

Holidays are a very important aspect of the Filipino way of life. Whether it be on the national or local level, the fact that Filipinos bother to take breaks from work so frequently sheds light on our fondness for commemorating dates that we genuinely deem to be important, while at the same time, spending quality time with the people that we love. It’s nothing about laziness or anything of that sort; Filipinos have just always had a soft spot for emotional, gut-wrenching events that change the course of national history. What better way to celebrate them than by doing so through a holiday? Students take a break from classes, teachers retreat home, and workers hide in the comforts of a long weekend that can be spent in a province as far away from the office as possible for a refreshing change of pace from the customary hard day’s work.

Republic Act 9492 was passed in 2007 as one of the main economic policies enacted by former President Gloria Macapagal-Arroyo, effectively moving national holidays that supposedly fall on relatively “unfavorable” days to the nearest Monday after. Done to encourage a sort of weekend momentum that theoretically spurs on consumption, the law was a popular one, giving Filipinos extended weekends that they originally wouldn’t have had and allowing them to fill up malls and cause hotels to overflow. Part of the rationale behind the acts’ implementation is the boost given to local tourism – a sector Arroyo felt was ripe for growth, and would then profit most from long weekends. Properly timed holidays send people packing as they briefly migrate to exotic locales to relax and spend their hard-earned cash, giving resorts a clientele apart from the usual foreign vacationers. Besides domestic tourism and the hospitality industry, retail and food industries were also given a boost, with heavier mall traffic as the leading cause of the sudden resurgence.

It was an interesting case, then, when newly-elected President Benigno Aquino III assumed the position and August eventually rolled in – a month notorious for having two potentially movable holidays, much to the contempt of school administrators everywhere. One of the aforementioned holidays curiously strikes a chord for Aquino – that of Ninoy Aquino Day, a commemoration of his father’s assassination normally celebrated on the 21st of August. This year, Ninoy Aquino day falls on a Saturday, and according to the law, should then be moved to the nearest Monday, that being August 23. On August 11, however, Malacañang released a statement declaring the holiday restored to its original date, with Aquino’s decision to ignore his predecessor’s established policy echoing his repeated sentiments about having the need to review the said law. What’s pushed into the spotlight, then, is the rationale behind RA 9492 itself; is holiday economics actually a good idea?

The assumption that serves as the driving force behind the policy is generally correct – buying into the Keynesian philosophy of demand being supreme when hoping to jumpstart a stagnant economy, Arroyo banked on the hope that longer weekends would drive up consumption and, eventually, trigger economic growth. It’s an opinion that has its roots in a relatively long-run perspective, one that hopes for Gross Domestic Product to approach a steady climb because of the sustained spending and the subsequent increase in production. However, although everything sounds great, the fact of the matter is that the assumption is largely speculative: there are no studies (at least none that we know of pertaining to the Philippines) to support these claims, and whether or not the law actually fulfills its goals is questionable at best. Here arises the distinct possibility, then, that the concept of holiday economics is a mere populist policy, aimed at pleasing the masses and boosting national morale – two worthy endeavors, sure, but not in the face of decreased labor productivity given the short work weeks.

A common view regarding the policy, however, is that it may either be slightly beneficial or completely neutral, but hardly economically harmful. Assume a simple case wherein a three-day weekend is enacted; the tourism industry thus experiences a net demand increase due to the Filipinos’ sudden need for an out-of-town vacation. Neighborhood sari-sari stores, however, are left back home theoretically suffering weaker revenue inflow for that weekend, showing us that the increase in net benefit is largely due to a simple redistribution of it. In such an example, an industry benefits and another loses out, but the economy largely breaks even.

Nonetheless, doing away with the bigger picture paints a different image of things. Consider the case of ordinary employees, who often come in two strains: one group gets paid a fixed amount regardless of sudden halts in the workweek, while the other receives compensation on a daily basis according to the number of days worked. Clearly, the second group is at a disadvantage. In spite of the reality of holiday pay – which dictates that a laborer be paid up to 200% his wage for coming to work on a declared holiday – firms are, by definition, profit-maximizing. It wouldn’t make sense for a stereotypical company, then, to continue operating on a day when it is sure to experience decreased traffic and yet still have to pay higher wages for its eager workers. Simply put, it would be hard to imagine employers choosing to incur losses on any given day. The expected course of action, then, would be that of just canceling work outright, which consequently lessens the amount that these laborers can earn. The Aquino administration presumably followed this line of thinking when it ignored Arroyo’s law, determining that the halt in production for a number of industries might just do more harm than good.

Shelving for a moment the influential presence of sentiment in the decision to restore the holiday to its original date, it becomes clear that a reevaluation of holiday economics at large is imminent. If Aquino is serious about his opinions regarding the matter, it will then be important for him to gather the appropriate data and evaluate the said law, imputing the sentimentality held by the people into his calculations. The latter will be very important in the decision to be made, considering how the strengthening of social norms seems to be a priority for this administration. While it is indeed easy to isolate the foremost agenda behind holiday economics and see it for what it economically is, the reality is that the formation of true and genuine citizenship will remain an earnest goal for any democracy – more so this one. Aquino will be repeatedly judged against the ideals he preached and stood by during his campaign, and the slightest doubt about a possible affirmation of Arroyo’s holiday policy can be seen as a chink in his otherwise pristine armor. There are numerous reasons for either continuing with or ultimately abolishing holiday economics, and it stands to reason that the need for a simple yet utterly crucial cost-benefit analysis is clear and timely.

In the end, it all boils down to the values and priorities that the administration holds most dear – either that or we all just fall prey to the seductive prospect of long, hard-earned weekends that we could all use every now and then.

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