BCRP: non-working days in Peru increased by 25% in the last 2 years

In the last two years, non-working days in the country have increased by 25%, as they increased from 12 to 16 holidays. In this way, formal workers have 30 days of vacation and 16 holidays, which makes us the nation with the most paid days off compared to the countries of the OECD and the Pacific Alliance; However, Peru has the lowest labor productivity of that group of countries, revealed the Central Reserve Bank of Peru (BCRP) in its latest inflation report.

According to the issuing entity, this increase could have different effects. And, although holidays can have a positive impact on the balance between work and family, productivity, and consumption in sectors such as tourism; It could also have a negative effect, in some cases, on economic activities, in addition to raising labor costs, affecting formal hiring.

“According to Peruvian legislation, The worker who works on a non-working holiday receives 2 additional daily remunerations to the ordinary remuneration that corresponds to him for that day: one for the extraordinary work performed, and another for the concept of a 100% surcharge. However, the legislation also indicates that, instead of payment, the right to enjoy a day of rest could be generated to replace the holiday not taken. In any case, non-salary labor costs increase,” says the BCRP.

What is the effect of holidays on the economy?

The issuing entity maintains that the effect of non-working days depends on many factors, such as labor participation, the variation in remuneration for work done on holidays, the transience or permanence of the establishment of new holidays, among others. However, an increase in working hours “reduces the labor supply and the GDPalthough it could also increase motivation and productivity on the rest of the work days of the week.”

Thus, in analysis by the Central Reserve Bank, based on recent research, it indicates that The newly approved four additional non-working days could reduce GDP growth by 0.16 percentage points in the first year of implementation regarding the progress that would be made in the absence of said holidays, although the estimated effect is a one-time effect on the level of the gross domestic product, that is, in subsequent years economic growth would not be affected.

The non-primary sector is the most susceptible to additional holidays, with an impact of -0.04 percentage points, while the significant effects occur in non-primary manufacturing (-0.05 points), commerce (-0.04 points) and electricity and water (-0.03 points). The primary sectors register medium impacts, although not significant.

Regulate holidays

In the opinion of the BCRP, the effects of the establishment of national holidays should be periodically evaluated – with the participation of all parties involved – compared to other alternatives such as the commemoration of festive dates without forced rest or the implementation of “floating holidays”, which implies that Companies together with workers autonomously decide the distribution of days of rest per yearas occurs in some provinces of Canada.

Another alternative they propose is that the holidays can be moved to a Friday or Monday, complemented with policies to boost domestic tourism on those days.