Are employers becoming too generous with holidays?

A recent survey published in People Management suggests employers are getting more generous with holidays and that 34 days per year (including bank holidays) is becoming typical.

This could be true if “Blue Chip” companies are the main participants in the survey. But it is not our experience in the Care and SME Sectors in the North West where 28 days including Bank Holidays is far more typical. A handful of clients have an increasing scale where there can be an extra day’s holiday per year of service, rising to a maximum (of up to 35 days in one case); but it is not typical.

However the reason being given for generosity nationally is that the extra holiday is a low cost option. It improves the remuneration package at a time when increased pay would affect cash flow. This assumes that the “opportunity cost” of the time lost on holiday is lower than the cost of the increased pay. That is not likely to be the case where minimum manning levels apply, such as in the Care Sector. It might apply in the manufacturing sector when demand is low.

However, even there I’d suggest that adopting the policy may be short-sighted because when demand does rise then the opportunity cost of those holidays will rise too…. and so will the expectation of pay increases – a double whammy!

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