Why holiday economics makes good qualitative sense

The Philippine calendar has quite a few holidays marked on it every year. We have regular holidays and special non-working days, all of which you can view here. Of particular interest this year 2012 is August, because aside from Ninoy Aquino Day and National Heroes Day the end of Ramadan (Eid Al-Fitr) is expected to fall somewhere around 18-20 of August.

For those who are not familiar with Muslim Holidays, the end of Ramadan falls on a different day and month each year because Islam follows a lunar calendar, instead of the Gregorian calendar we are all familiar with. It is usually 10-11 days shorter (354-355 days), thus rarely will the Islamic and Gregorian calendars ever coincide, much less start at the same time. Benigno Simeon “BS” Aquino III’s predecessor, Gloria Macapagal-Arroyo (GMA) usually declared the end of Ramadan a holiday, as a sign of solidarity towards our Muslim kababayans. It seems that at least for this year, BS Aquino did as well. August 20, 2012 has just been declared a regular holiday by Malacañang.

GMA coined the term “holiday economics” during her term as President, for her practice of moving holidays to either the nearest Friday or Monday. If the holiday fell on a Tuesday, it was moved to the nearest Monday. If it fell on a Wednesday or Thursday, it was moved to the nearest Friday. The intention was to enable government and private employees to enjoy a three day weekend holiday, to reduce disruption to business and production schedules, and to encourage domestic tourism and give employees long weekends.

It comes as no surprise then that PNoy is not really a fan of holiday economics. As the current sitting president, though, he has to come up with substantial reasons other than “it was a project of Arroyo, therefore it’s corrupt.”, and his buddies in the business circles came up with it for him. They complained that more holidays would mean less working days for their employees, thus less productivity. The other complaint is that every time there’s a holiday, they need to pay every employee who comes to work at higher than the normal rate. Thus, their complaint is primarily focused on the fixed and variable costs that they incur. All perfectly understandable; what company wouldn’t want to reduce all their outflow of money wherever possible?

The cases being made against holiday economics by the business circle focus primarily on the quantitative aspects of it, although some groups also complained of tinkering with historical dates by executive fiat. However, in any analysis, the qualitative aspect is just as important, but often overlooked. That’s because qualitative analysis is much more difficult to measure and define; more often than not, the factors involved are intangible and subjective.

That is the point I attempt to make here. The qualitative aspect of holiday economics should not be ignored.

The premise here is that we regard the individual employee as akin to a production machine. The employee produces a certain amount of output per working day. Those familiar with production lines would know that in an 8-hour working day, for example, the machine does not necessarily always run the whole 8 hours. Apart from actual running time, there exist setup time, changeover time, and down time. Let’s define them briefly below.

Setup-time: In manufacturing operations, the time needed to perform tasks involved in starting up an operation. Also known as start-up time.

Changeover time: The time it takes to convert a machine from one process to another. Changeover may require switching fixtures, tools, programming, and other aspects of the manufacturing process.

Down time: Period during which an equipment or machine is not functional or cannot work. It may be due to technical failure, machine adjustment, maintenance, or non-availability of inputs such as materials, labor, power. Average downtime is usually built into the price of goods produced, to recover its cost from the sales revenue. Opposite of uptime. Also called waiting time.

The main difference between a human employee and a machine is that a human employee relies additionally on momentum and continuity of work to allow him/her to reach optimal output, whereas a production machine mostly relies on the optimal tweaking of its settings to reach optimal output.

The aim of any production plan is to maximize the amount of time that the machine is running, and to minimize the down time, changeover time, and setup time. Now, think of plotting the calendar for holidays as your production plan. The underlying objective is to minimize the setup time and changeover time that employees experience between weekend or holiday mode to work mode. You can do that by grouping holidays and weekends so that they are consecutive and unbroken as much as possible.

Try to imagine the routine that employees go through every working week. When we report to work on the first working day of the week, we take a certain amount of time to get into the rhythm of work for that week. This is our setup-time. As we go through the week it gradually gets easier to put our mind into work because we’re already psyched up for it. Besides, looking forward to the weekend is a motivation too. As we get closer to the weekend, we have the option to finish as much work as possible before we engage in weekend down time, or we can postpone it for the following week.

Now what happens if holidays are left in the middle of the week without moving them to the nearest Monday or Friday? The employee has to experience changeover time from vacation mode to work mode more than the normal or optimal number of times in a week. Employees feed off the rhythm and continuity of work-flow to get them through the week. Think of an on-and-off switch. Employees are in the end, still human; they take a bit of time, and especially need momentum, to get up to their optimal working rhythm pace. You expend more energy, and consequently feel more tired, when you constantly switch between work-on and work-off mode due to holidays, don’t you? Doesn’t it make more sense, therefore, to ensure that workweeks are continuous?

The benefits of stringing holidays together is intangible, but we always have to remember that productive employees are those who can do the most work given a certain period. Yes, the benefits of allowing your employees to keep their rhythm are intangible. It is in this case that the intangible benefits will eventually translate to actual financial savings. The caveat is that these are long-term savings; are Filipino employers prepared to think long-term?

What am I forgetting? Oh yeah, the “tinkering with history” argument. Let me ask you this: how many people are there left in the Philippines who still take memorial days seriously? Exactly my point. Seriously, holidays in the Philippines have been reduced to mere opportunities to either go to the mall, take vacations in some faraway place, or to drink with one’s neighbors.

I sincerely believe that it’s not the date that’s important, it’s the ideals behind remembering that date that should be honored every year. If you truly believe and hold on to your ideals, then the date shouldn’t even matter; it’s just a formality.

That’s the tendency with Filipinos that is often overlooked: they are concerned with the letter of things yet consistently fail to grasp the spirit instead.

In the end, I still am left to wonder: does PNoy appreciate what an employee has to go through everyday just to carve out a living? In carving out his stand on holidays, who should he be listening to? The people or his oligarch friends, or both?

The only thought that he has ever entertained, it seems, is this: Any project of Arroyo is not good because it is Arroyo’s. And because PNoy continues this tradition of tearing down his predecessor’s policies, good or bad, seemingly without thorough analysis, then the cycle of impaired development simply continues.

So is PNoy’s really any different from politicians past? Do PNoy’s government and policies make good qualitative sense?

FallenAngel

А вы, друзья, как ни садитесь, все в музыканты не годитесь. – But you, my friends, however you sit, not all as musicians fit.