Give us a break

Roger Partridge
Insights Newsletter
29 May, 2020

When told the French peasants had no bread during a famine, the Queen of France, Marie Antoinette, is said to have exclaimed “Qu'ils mangent de la brioche!" – loosely translated as “Let them eat cake!”

Last week’s calls for extra holidays to support the ailing tourism industry are just as out of touch.

New Zealand is a nation of small businesses. Nearly half a million of them employ about a third of the workforce. And in the aftermath of the war on Covid-19 many SMEs are struggling – including in the tourism sector.

But the solution to New Zealand’s tourism woes is not an extra public holiday or two to visit Queenstown.

While everyone loves having days off, an unexpected statutory holiday either costs employers a day’s expected revenue or sees them incur extra payroll costs. Penal rates apply on public holidays and staff working statutory holidays must be given a day off in lieu.

An additional paid day off for employees comes at an equal and offsetting cost to employers. Taking from Peter to pay Paula will not generate extra national income for Kiwis to spend on vacation. At best it is a zero-sum game.

More likely it is a negative-sum game. Heaping extra costs on already stressed businesses may be the straw that breaks the camel’s back. And if the extra cost does not push a business over the edge, firms will simply employ fewer staff to claw back the extra costs of the additional holiday pay.

What may seem like a good way of helping the tourism industry would more likely end up hurting it.

Paradoxically, the best way to support the tourism sector is for everyone to be back at work. That way everybody will be able to afford a take a break.

We may all love cake, but we need to earn our daily bread to enjoy it.

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