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Labor Day and the impact of bank holidays on the economy

The impact of Labor Day.

International Worker’s Day, or Labor Day as it known in most countries, is a celebration of the working class and laborers. It is a holiday promoted by the International Labor Movement and it is celebrated on the 1st of May.

Labor Day is a celebration that does not require traditional decorations or gift giving. Labor Day is basically a day off work in honor of work (a little ironic, we know), but it is also a day with extraordinary history and meaning. Nowadays, thankfully, it is hard to imagine that there was a time when workers had no rights and no days off, unless they were very sick and physically unable to work. Working hours were also much longer back in the day. At the height of the Industrial Revolution, people moved from the countryside and the traditional agricultural jobs to industrial cities and started working in different factories. This was happening towards the end of the 19th century, when a person would work about 12 hours every day, including weekends, just to get by. The concept of weekends was yet to be introduced, and to not forget – child labor was something normal. Children from the fragile age of 5 years could be found working in factories and mines. Working conditions were very bad, people’s lives were often in danger, workers had extremely limited access to clean water, fresh air or even natural sunlight and sanitation. To sum up, people of all ages were working every day, as long as there was enough sunlight to work, in very bad working conditions. 

Presently, most of us are lucky enough to work in safe and pleasant conditions, we have HR departments, unions and labor rules that protect the employee. Most countries today have 8 hours workdays and weekends off,  meaning work weeks of 40-hours. The current discussion is about the reduction of working hours to 6 hours per day or having a 4-day work week, therefore reducing the weekly hours to 30-32. The progress society has made is incontestable and for this we can thank a few brave visionaries from the US. Grassroots labor movements gathered to discuss human rights issues from the workplace, they introduced the concept of 8hour workdays, workfree weekends and other working conditions improvements. At that time, this concept was revolutionary, and it did not come without backlash from employers. 

So, what does all of this have to do with the 1st of May? On the 1st of May 1886, campaigns for establishing the legal eight-hour workday were started by the American Federation of Labor. Hundreds of thousands of workers started protesting across the United States, however, the largest demonstrations were in Chicago. Everything culminated three days later, on the 4th of May in Chicago’s Haymarket Square, where several protestors and policeman were shot, injured, or killed. May 1st became an annual event and the International Worker’s Day also thanks to the affiliation of Social Democrats with the Second International. The Second International was a successor of the early International Workingmen’s Association and it came as a support of the working class demand campaigns  for 8-hour workdays.

In 1904 during the Sixth Conference of the Second International, the legal establishment of the 8-hour workday was demanded by trade unions and Social Democratic Parties. The 1st  of May became a public national holiday in many countries, however, certain countries, such a US or Canada, chose to celebrate Labor Day on another date (such as the 5th of September or on the first Monday in September) that bears more significance for them. 

In most European countries, 1st of May is a public or a bank holiday, where workers from most industries have a half or a full day off. What effect does this day off work have on the economy? The answer is: it depends on who you ask! It has a very positive effect on commerce, travel, hospitality, and entertainment industry, as people usually celebrate this day (and other public holidays) by going out for picnics, shopping or to travel. A few countries (such as the UK and New Zealand) are discussing the addition of a new public holiday in October to help boost the post Covid-19 recovery for the most affected industries, which are hospitality and tourism. Nothing has been confirmed, as the proposal is receiving objections. Here we can see the other standpoint, the employer’s perspective on paid days off. The additional costs that employers would encounter can potentially damage the already sensitive financial position of many businesses. Another public paid holiday for employers ultimately means loss of money and loss of a full day of productivity. 

Public holidays play an important role in every country’s economy. While they represent loss of productivity for employers, they bring huge financial gains to other industries. A PWC study from 2015 on the impact of adding an extra public holiday in Australia found that the costs are outweighed by the benefits, even after accounting the increased consumer spending during the public holiday, the economy would be at a loss of 150 million Australian dollars. A study from the Catholic University in Milan found that the addition of a new holiday in Italy had a small positive impact, after the consideration of all economic data. What these statistics are not considering is the beneficial effect a paid day off has on workers morale, energy levels and well-being, which is certainly a very important element.

Nowadays, certain countries, such as Norway, still celebrate 1st of May with speeches, marches and parties organized by labor unions, while in other countries people simply enjoy the day off work, meet up with friends and family and prepare some delicious food and fun games. Regardless of if you choose to use this day off work to sleep in, meet with friends or to participate in marches, it is important to remember the history of this day and the privileges we still enjoy to this day.