’Tis the season to work a lot less – just in time for the economy’s annual peak
While some people are winding down for the “holiday season”, others are gearing up for the busiest time of year. This year’s busy season is more uncertain than most – chalk it up to Omicron – but for now at least, it’s looking a lot like Christmas.
Anyone who’s braved Christmas shopping knows that retail turnover peaks, reliably, in December. ’Tis also the season for filling the coffers in cafes, restaurants and hotels. But the latest iteration of the Covid-19 virus is putting a dent in already depleted coffers for some. A confirmed positive can put the entire Christmas party at risk. It can be a serious blow for a venue relying on bookings.
Keeping things moving over the holidays is important not just for hospitality, but for the economy more broadly. As a general rule, Christmas is far from being idle time. Instead, the December-March period is almost always the economic bumper season, where we record the greatest amount of activity.
Source: author calculations, based on ABS
You’d think that this also means that we’re all hard at work generating this activity. Not so. Across most industries, average hours worked in a week falls over the December quarter.
Why?
The easiest answer is there are simply fewer working days: 75% of national public holidays fall in the December quarter. While not everybody gets the day off, the majority do – so we do less work almost by definition.
This isn’t the full story though. There are changes in demand for, and supply of, labour over summer.
Source: author calculations based on ABS
On the supply side, many people who are employed don’t want to work over Christmas. For the past five years, more people have taken annual leave in January than at any other point during the year.
While the people who are already employed are working less, there are
also more people seeking employment. School and university holidays mean that between 2016 and 2020, there were on average 71,000 more 15-24 year olds in the labour market during the December quarter than at other times of the year.
Combined, these factors mean that there is a generally larger labour force over the summer in headcount terms, but each worker is willing to supply fewer hours. This brings average hours down.
In some industries, there is also less demand for labour. Businesses who sell to other businesses and government, for example, often face lower demand. Education providers including schools and universities are closed. Real estate agencies go quiet.
Seasonal variations in demand for these businesses mean there is less work to be done. As a result, some companies shut down, compelling staff to take annual leave – whether they would like to or not. There’s a range of business reasons for this. For office-based industries, as an example, shutdowns are cost-saving. No need to engage a cleaner, or turn on the air conditioning.
It also helps businesses to manage leave balances. Full- and part-time workers, who comprise about 73% of employed people in Australia, are entitled to annual leave. It’s a treasure chest that we protect fiercely. For employers, though, large annual leave balances are a liability to be managed. After all, an employee can leave – and take the treasure chest with them.
It’s likely that employers will be particularly keen on encouraging people to take leave this year. Border closures and lockdowns mean that many of us have been hoarding leave. Roy Morgan estimates that working Australians had nearly 175m days of accrued annual leave in May. With median hourly earnings of $36, this implies a whopping $6.3bn in liabilities for employers. While there’s noevidence of a great resignation in Australia, the rumour alone of higher-thannormal turnover is likely to heighten anxiety.
Some people may not have the luxury of taking leave over summer. While average hours may be lower, there are people who find the Christmas period especially busy, and stressful. Work, as much as the prospect of a real life family feud, can make the festive season less joyous for some.
In a 2018 survey, more than half of small business owners said that they missed out on sleep and spending time with family because of work commitments. Spare a thought for your neighbourhood postie, too; estimates are that the postal network will be delivering more than 3m parcels every day.
Whether you’re planning on working hard or hardly working, it has been a big year. We’ve had highs and lows, lockdowns and freedom days. If coronavirus has taught us anything, it’s a reminder to be kind to the people working on the frontlines. To the people who will be keeping the gears turning over the festive season, as they have been through 2021 – from all of us, thank you.
• Jessica Mizrahi is an economic consultant and commentator. She has taught, researched and applied economics for over a decade