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Why Do North American Workers Get So Little Paid Time Off?

Here in Ontario, some of us are experiencing the new statutory holiday today brought to you by the Liberal party, who thought voters could use a day off in the long, dreary days of February.  It was a popular move, except for many employers, who argued the holiday could have devastating effects on the Ontario economy.  This Star story from today is still focusing on this argument against the new holiday.

Well, here’s an interesting study of OECD countries that shows how cheap we are in North America when it comes to time off from work with pay.  Check out this Chart, which shows Canada, Japan, and the U.S. lagging all other countries in terms of mandatory vacation and statutory holidays.  At the top are Austria and Portugal, which require 35 paid days off per year, while at the bottom are Canada and Japan (with 18) and the U.S. with none!  (American law requires no paid holidays, consistent with their philisophy that most employment terms should be left to ‘bargaining’ by employees and employers.  American law also does not require any notice of termination).  I’m not actually sure how the Canadian numbers were calculated–whether it is an average of all jurisdictions or based only on the Federal Code, or something else.   In Ontario, my quick count is 9 stautory holidays, plus 2 weeks’ mandatory paid vacation, for a total of 19–still way off European norm.

Which, of course, raises the question:  Why is it that European employers seem to manage the costs of so many paid days off, while North American employers go nuts whenever the government proposes one new day?  Do you think there is something about our business or social culture that explains the difference?

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5 Responses to Why Do North American Workers Get So Little Paid Time Off?

  1. Ryan Reply

    February 16, 2009 at 6:54 pm

    If the rule under the ESA is ‘equal or greater’ benefit, and the ESA mandates minimum 10 days off per year with 9 statutory holidays (19 days), are only those workers with more than 10 days off (bringing their total to 20 days or more) required to work on Family Day? In other words, if you’re scraping by with the bare minimum 19 days prescribed by the ESA, an employer can’t ask you to work Family Day unless they pay you time and a half, right?

  2. SaskatoonMark Reply

    February 18, 2009 at 8:13 pm

    David Doorey asks, “Why is it that European employers seem to manage the costs of so many paid days off, while North American employers go nuts whenever the government proposes one new day?”

    The problem is with the question’s premise: European employers do *not* cope with their regulatory burden. European employers, in droves, are moving their manufacturing facilities to Poland, Romania, Slovakia, and other countries with lower labour costs than Western Europe (i.e., just about anywhere). With Polish manufacturing wages roughly a fifth of German wages, to give one example, any CEO who maintains a factory in Germany should be fired for incompetence.

    Forcing Canadian employers to give European-type vacations would put the final nails in the coffin of Canadian manufacturing, and would drive many non-manufacturing companies into insolvency as well.

  3. admin Reply

    February 18, 2009 at 10:45 pm

    Thanks SaskatoonMark. You make an excellent point. It assumes that companies make investment decisions on the basis of labour costs and that governments should determine labour regulation with this in mind.

    In particular, it seems a pretty strong argument for sectors where labour costs amount to a significant proportion of total production costs. But that is not true of many industries, and don’t many smart people argue that labour costs are far less important than the marginal productivity of labour, which includes a lot more factors than just wages and holiday pay. So if German workers are far more productive than Estonian workers, German infrastructure is better, Germany is closer to the markets, etc., then the benefit to operating in Estonia drops quickly. And isn’t the common prediction of trade theory that free trade will not in fact cause a ‘race to bottom’ in labour standards.

    Plus, and correct me if I wrong, but don’t most studies show there is not much of a relationship, between labour regulation/standards and inward direct investment? I recall the much quoted OECD study, but other studies are listed in note 28 (I think) of the Alan Hyde paper available at this link: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=896362

    Are there newer studies showing that, in fact, companies are fleeing Western Europe in droves for Eastern Europe because of the better labour practices in the former? I’d like to these those studies. Thanks, David

  4. admin Reply

    February 19, 2009 at 4:38 pm

    Here is SaskatoonMark’s response to Admin response to him:

    I hope you’ll pardon me if I don’t devote my evening to looking up the papers cited in Hyde’s footnote #28, although I did read the Hyde paper itself. (Okay, okay, let’s just say I skimmed it and leave it at that.) Hyde is arguing that it’s desirable to have transnational labour laws, but let’s set that topic aside for another time.

    I agree that there are factors other than wages and labour law that determine factory location. Distance matters, language barriers matter, infrastructure matters, and the degree of societal disorder matters. As we know, multinationals are not racing to establish factories in Iraq or Somalia to take advantage of their low wages. However, the more developed of the Eastern European countries are attracting massive foreign investment due to a favourable combination of geography, infrastructure, and political stability, combined with low wages. The German-Polish wage gap is particularly stunning; a five-fold wage difference compensates for many of the drawbacks you mention. Admittedly, there is hesitation in investing in the more troubled of the East European countries (e.g., Moldova, Ukraine) despite low wages.

    Executives of multinationals prepare cost projections when deciding where to locate a new facility, and the level of local wages and the level of labour legislation would affect those projections. Surely you’re not arguing that these variables have no impact on an executive’s decision to invest?

    According to the World Bank’s scoring system for labour standards, the countries with the strictest labour standards are those of Africa and Latin America that follow French legal traditions. I suspect that enforcement is laughable in many of these places, and I wonder if the studies cited by Hyde take into account rigor of enforcement.

  5. M Reply

    September 24, 2017 at 5:21 am

    “Why is it that European employers seem to manage the costs of so many paid days off, while North American employers go nuts whenever the government proposes one new day?”

    North American employers could perfectly managed such costs if they wanted to. The problem here is that they don’t and, since North American workers are brainwashed into thinking that it’s fair if employers exploit them, employers can refuse to pay vacations to their workers. I perfectly expect this coming from the US, the only industrialized country which doesn’t provide healthcare to all of its citizens, but from Canada it’s a bit weird. On the other hand, Canada shares a border with the US and so it is similar to the US in a lot of things, both good and bad.

    On the other hand, in Europe there are laws mandating paid vacation. European governments never used the excuse of the economic crisis to repeal such laws because the European Union mandates at least 20 days of paid vacation every year.

    (Now Brexiters will read this and be like “Damn authoritarian Brussels forcing British employers to pay for their employees’ vacations. Well, British law mandates at least 28 days of paid vacation so feel free to cry harder, Brexit capitalists.)

    Back to the topic on Europe… Let’s say the European Union decided to repeal the 20 days paid vacation law. Then governments could be free to repeal their paid vacation laws as well, right? Wrong. Portugal and Spain were strongly affected by austerity measures and both countries provide 22 days of paid vacation. But would EU countries repeal their paid vacation laws if the EU allowed them to do so? Maybe if they wanted long strikes and possibly a revolution. In the end, European capitalists don’t provide paid vacation because they’re nice people. The economic crisis showed that they can be as evil as North American capitalists. Is that they know that the European people won’t allow them to take away their rights.

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