Editorial: Holidays move healthy in the long term

This may seem an odd time for the Government to reduce mandatory holidays. Industries with unsold inventory in the recession are urging staff to take all the holidays owed to them at the moment. Few will be offering workers a bonus to forego their fourth week of statutory annual leave. Nevertheless, National's intention to proceed with its promised amendment to the Holidays Act is important for the future.

Employers, particularly on a small scale, were loaded with many extra costs by the previous Government, which did not seem to appreciate the full impact on the margins of a small business of a liability as seemingly trifling as an additional week's holiday. It was an entitlement, moreover, that Labour would not allow to workers to sell. The employer did not have the option of paying staff a premium in lieu and covering the additional cost, the employee did not have the choice of earning extra cash rather than taking leave.

The mandatory element was important to the Labour Party and the union movement. They believe few employees are in a position to refuse if their boss would prefer them to work. But there will be just as many instances where the worker would prefer the extra money. Overtime opportunities are normally prized in the workplace and those not offered them seldom celebrate their good fortune.

Work-life balance was not a decision the previous regime was willing to leave entirely to the individual. Only the self-employed would have the option of taking less leisure time than the law decreed. For the rest, the legislators knew best.

National's intended amendment will not reduce the entitlement. The continuing statutory right to four weeks will strengthen the hand of those who want all of their holidays, and force employers to compensate them reasonably. The rate that will have to be paid in lieu of a fourth week will no doubt be a subject of debate before the amendment is passed but the Business New Zealand council clearly expects firms will have to pay twice the normal weekly rate. Its chief executive says it will effectively be a 2 per cent annual wage rise for those who work.

Thus employers cannot look forward to relief from all the extra costs they have faced under the legislation of two years ago. But those who have to bring in casual labour, or find other ways to make up the lost production, will be able to weigh up those costs against paying a week's double rate to some of their regular staff.

Union leaders are too quick to lament a return to a standard three weeks annual holiday. If an additional week is genuinely valued by most people, and the lost production is not valuable enough for their employer to compensate them, four weeks will remain the norm. It is healthy for the economy that the holiday requirement should undergo this test.

And it will do so only when the global recession is abating and New Zealand's export markets are recovering. Until then, many employers will be less interested in buying back holidays than in finding ways to reduce working hours. Indeed we might not see the scale of unemployment the country might suffer until current holiday entitlements are used to the full. Even the Government's offer to subsidise a nine-day fortnight has yet to attract more than two applicants.

The last measures of unemployment, both the labour force survey in December and, more recently, the number on the dole by the end of last month, are surprisingly low. New Zealand employers have come through a long period when it was hard to find and keep good staff and they may be doing everything possible to keep them. This loyalty on both sides augurs for mutually satisfying decisions on the happy day that they can worry about holiday obligations again.