Every single national holiday or strike costs over Rs82 bn

LAHORE: National holidays are surely a delight for students and especially the salaried workers around the world, but if businesses are closed in Pakistan for one day either due to any shutter-down call or owing to a gazetted day-off, a complete lock-down can cost approximately US $0.789 billion or Rs 82.24 billion to the national coffers if one divides the country’s Nominal GDP of $288 billion by 365 and if one assumes that whole of the economy is documented.
These calculations conducted by the Jang Group/Geo News have taken into account the fact that the latest US dollar-Pakistani Rupee parity rests at roughly Rs105.50 per American dollar.
As far as the figure of Pakistan’s Nominal Gross Domestic Product (GDP) of $288 billion is concerned, it is mentioned on the International Monetary Fund (IMF) World Economic Outlook Database of April 2015. The figures being quoted by the World Bank and the CIA World Fact book etc in this context are not much different from the IMF calculations.
Now, this figure of a one day loss of Rs 82.24 billion due to a single day off only includes documented production of goods and services, because the Federal Board of Revenue (FBR) had estimated in August 2012 that the underground or parallel economy in Pakistan has grown to be more than half the formal/documented economy.
So if one goes by the August 2012 FBR hypothesis, and if one assumes that 50 per cent of the Pakistani economy is undocumented, grey or parallel, a one-day business closure on a national holiday will actually stand at somewhere around the Rs 164.48 billion region!
In gloomy economic scenarios of heavily indebted nations like Pakistan, a loss of Rs 164.48 billion in just one day or within 24 hours is a bit too much, surely a huge drain and burden on struggling economies like ours.
Yes, salaried class can get back to work recuperated after a national holiday, and both retailers and those in the hospitality industry can earn some welcome bucks on these off-days, but then there are capital intensive industries and export units that suffer productivity losses.
This sorrow state of affairs, in turn, affects the GDP per capita (US$1,1513 in Pakistan’s case) and GDP per sector. So that is where the public suffers due to reduced earnings at the end of the day.
Simple economics without the use of complicated and technical jargon!As far as the increased business activities at shops and restaurants on national holidays etc is concerned, they constitute just a small portion of any country’s GDP.
For example, according to a BBC report of April 9, 2012, only about 15 per cent of the British economy, shops, pubs, clubs, restaurants, cafes and visitor attractions etc actually do well on a bank holiday.
It goes without saying that it is extremely hard to calculate the losses accruing out of a one-day closure of businesses anywhere in the world, and the task becomes even more daunting if certain assumptions have to be made in case of undocumented economies like Pakistan.
It is imperative to note that on January 29, 2013, the then Acting President Federation of Pakistan Chambers of Commerce and Industry (FPCCI) Iqbal Dawood Pakwala had revealed in presence of the Sindh Chief Minister Syed Qaim Ali Shah that a one-day strike in Karachi alone caused a loss of more than Rs10 billion to the country’s economy.
So, if one takes the Karachi-related figure given by the Acting FPCCI Chief Iqbal Dawood Pakwala as a base, the Rs 82.24 billion countrywide loss on account of a complete single-day strike makes a lot of sense!
Although England and Wales have only eight public holidays, one of the world’s lowest allocations of communal days off, a 2012 report of the United Kingdom Centre for Economics and Business Research had found out that each bank holiday was costing £2.3billion to the British economy.
The Centre for Economics and Business Research is one of the UK’s leading economics consultancies, which has been supplying independent economic forecasting and analysis to hundreds of private firms and public organisations for the last 20 odd years.
There was a lot of hue and cry in England due to an additional bank holiday in June 2012, which was announced to commemorate the Queen’s Diamond Jubilee.
Numerous prestigious British media outlets like the Telegraph and The Mail etc had reported that this particular national holiday had hurt the economy to the tune of £1.2 billion in one day, besides admitting that the hole could stretch to £3.6 billion.
Another extra bank holiday in UK, which was celebrated on April 29, 2011 to mark the wedding of Prince William and Catherine (Kate) Middleton, had cost 1.25 billion pounds per day to the British exchequer, according to Government estimates.
A November 23, 2010 report of the Daily Telegraph had stated: “Prince William’s wedding to Kate Middleton will cost the economy £5billion by creating consecutive four-day weekends in April, businesses have warned. It means Britain will be open for business on only three days between April 22 and May 2, because Easter is the weekend before the wedding, and the May Day bank holiday is the following Monday.”
The British Premier David Cameron had said on November 23, 2010: “The costs of the wedding itself will be met by the Royal Household, with Government meeting any wider security or transport related costs.”
But, the British Department for Business, Innovation and Skills had expected the cost to the economy to be around £2.9 billion, excluding Scotland which decides bank holidays separately.
These estimates were based on government analysis of data from the UK Office for National Statistics on the cost of the Queen’s Golden Jubilee in 2002, which was also declared a national holiday incidentally.
Just a few months ago, according to April 28, 2015 report of the Telegraph, the Royal Bank of Scotland and the Natwest Bank in the United Kingdom had decided to kill the May 4 Spring Bank holiday on their own, and had announced to open dozens of its busiest branches on Monday (May 4, 2015).
Similarly, in India, according to country’s business chambers, if businesses are closed for one day, it costs Indian Rupees Rs 250 billion to the economy
(Reference: A September 2, 2015 report of the Economic Times) In United States, according to an American polling company “Rasmussen Reports,” every federal holiday costs $450 million in employee pay and lost productivity to the government.
The New Jersey-based “Rasmussen Reports” is engaged in the collection, publication, and distribution of public opinion polling information. It conducts nightly tracking, at national and state levels, of elections, politics, current events, consumer confidence, business topics, and the president’s job approval ratings.
In 2002, as research further shows, the New York state legislature decided not to make 9/11 a holiday after the state comptroller said it would cost $43 million.