At the height of summer, the French government has decided to wipe out the August holidays and to bring forward the start of the school year by a month to fill the state coffers. This is the scenario of the recent film from Antonin Peretjatko, La Fille du 14 juillet (The Daughter of July 14).

There is little chance that the government of Jean-Marc Ayrault, or any other government, would take a decision as sudden and drastic as that. The idea of reducing the holidays to spur the economy, though, is not the preserve of screenwriters.

In 2010, two federations representing German SMEs proposed that the legal number of days of paid leave be reduced by one or two weeks “to sustain the (economic) recovery”. More recently, the Italian Secretary of State for the Economy proposed that paid holidays be reduced by one week to bring Italy out of the recession, claiming that such a measure would result in “an immediate impact of approximately one point in GDP”.

The idea does not always come down from on high: in March 2012, Swiss voters, fearing the adverse consequences for the economy, rejected – by 66.5 per cent – a federal referendum on a popular initiative that proposed introducing two weeks of additional paid holidays.

In the economic crisis afflicting Europe, the European countries are seeking to gain competitiveness by reducing their production costs, and those include the cost of labour. To achieve this goal, they can, for example, reduce wages, as Spain did in 2010. That’s a policy that’s unpopular in the least, and it entails significant risks.

Reducing paid holidays is, theoretically, an alternative. The theoretical effects of such a measure can even be calculated. “One extra working day, we estimate, would bring between 0.07 and 0.08 of a point of additional growth,” says Ronan Mahieu, head of the Department of National Accounts at France’s National Institute of Statistics and Economic Studies (INSEE). “The effect on annual growth remains fairly weak.” Weak, but real.

‘Economic abberation’

Despite the additional theoretical benefits of extra working days, all the countries of the European Union offer at least 20 days of paid leave to their workers. On the other side of the Atlantic, many believe that the 20 to 30 days of paid leave granted by European countries are an economic aberration of the same stripe as other, much too generous social benefits.

The negative impact of paid holidays on the economy, however, has never been proven, and some even argue the opposite holds true. “From a theoretical standpoint, the more holidays a worker has, the happier he is, and his productivity at work will go up”, explains Francesco Vona, an economist with the Observatoire Français des Conjonctures Economiques. “There's also a cognitive explanation: our ability to concentrate is limited and our creativity is bound up with our ability to see things from the outside, which is difficult to do when you work too much.”

Careful, though: giving too much paid holiday might also raise the working tempo in some areas, such as industry, where the other employees must make up for the loss of output of workers who are away. A pace of holidays that is too intense may have the same harmful effects on health (stress, fatigue, illness) as too few holidays.

In general, the richer a country, the lower the number of hours worked per year – but this does not necessarily mean that the way for a country to get rich quickly is to reduce the number of hours worked. South Korea and Mexico, which work even more hours annually than Greece, have a much higher growth rate than France.

Ideal holiday allowance?

There are good reasons to think that more holidays leads to a rise in worker productivity, but what interests a country above all is economic growth – that is, how much more wealth is produced year after year. The notion that extra holidays can improve total production over a year, thus creating growth, is however much less obvious: if that were the case, the best way to maximize production would be to have paid holidays all year round.

“To calculate the real impact on the economy of having one day more or one day less off work is very difficult,” sums up Ronan Mahieu of INSEE, noting that not all workers take all the leave they are entitled to.

Is there an ideal number of paid holidays – ideal for the economy, that is? Probably not, especially as a minimum legal number of days of leave does not correspond to the days of leave actually taken by workers, including those who do not take all their vacation and those who work in sectors or companies that offer twice the minimum.

The solution may lie in a much more flexible approach to holidays and, more generally, working time.

Or even a future with an unlimited number of holidays, such as at IBM or Netflix? The principle: let employees take as much vacation as they want, as long as the work is handed in on time. It’s method that seems to be bearing fruit.