Extra week’s holiday would harm productivity, growth

Proposals to increase holiday entitlements to four weeks a year would harm New Zealand’s growth prospects, says Business NZ.

MP Matt Robson’s Holidays (Four Weeks’ Annual Leave) Amendment Bill is likely to get its first reading in Parliament this week, and Labour Ministers are apparently being lobbied hard to support it.

But Business NZ Executive Director Anne Knowles says an across-the-board entitlement of four weeks would cost the country at least $948 million a year*.

“The Bill would give four weeks’ holiday to those currently entitled to three weeks. But it would also set in motion a huge relativity drive as those on currently on four weeks made the case to get five weeks’ leave, to maintain their relativity. For all practical purposes then, it would likely be an additional week’s holiday for everyone.

“The cost would have to be borne by the New Zealand economy.

“It’s money that would have to be found largely by small employers. Small businesses are already reeling from numerous increased compliance costs that make it hard to stay in business and hard to continue creating jobs for New Zealanders.

”Mandating another week’s holiday for everyone sounds appealing of course, but it would reduce the nation’s productivity and load extra costs on small businesses. None of that would help growth or prosperity in the longer term.”

*Increasing annual leave entitlements to four weeks would add another 2% on the annual wage bill. Given that salaries and wages in 2001 totalled $47,391m, a 2% increase would mean a further $948m would have to be found.

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