Views mixed on economic effect of temporary holiday

By Choi Sung-jin

Friday was a temporary holiday designated by the government to stimulate dormant domestic demand, but views were mixed between government officials and private experts over its economic effect.

Some ordinary people have also wondered how the special holiday affected the economy and in what ways.

A report released by the Hyundai Research Institute Thursday estimated the effect to be about 1.31 trillion won ($1.12 billion). It assumed 25 million Koreans, half the population, took a day off and multiplied it by their per capita spending of 79,600 won to produce total consumption of 1.99 trillion won, and deducted from it 680 billion won to be spent abroad.

The breakdown of domestic consumption was 480 billion won in dining, 330 billion in lodging, 280 billion won in transportation and 220 billion won in culture and other services.

“We estimated the economic effect of this year’s temporary holiday to be bigger than that of last year,” said Ju Won, an executive at the think tank. “As people have a four-day holiday this year, a day longer than the weekend of National Liberation Day last year, they might have chosen longer travels.”

It was the first temporary holiday aimed solely at helping reinvigorate the economy. Aside from national funerals, there have been only three temporary holidays – Sept. 17, 1988 (the opening day of the Seoul Olympic Games), July 1, 2002 (celebrating Korea’s advance to a semi-final spot in the World Cup soccer tournament), and Aug. 14, 2015 (the 70th anniversary of liberation from Japanese colonial rule).

May is often called “family month.” There are many commemorative days this month, such as Children’s Day (May 5), Parents’ Day (May 8), Buddha’s Birthday (which falls on May 14 this year) and Teachers’ Day (May 15), forcing people to open their purses frequently to buy gifts and travel. Last year, retail sales in May reached 31.64 trillion won, a monthly record.

Korea’s straight holidays this month also overlap with those of Japan (April 29-May 8) and China (April 30-May 2). The Korea Tourism Organization estimated more than 140,000 Chinese and Japanese tourists would visit Korea between April 29 and May 8.

To stimulate domestic demand further, the government also exempted expressway tolls and opened four major palaces in Seoul, royal tombs and national museums free of charge.

The Ministry of Strategy and Finance expected the consumption index would turn for the better on the temporary day off. “Despite unstable factors abroad, the consumer survey index has improved over the past four months,” said Yoon In-dae, director of the ministry’s Economic Analysis Division. “We wanted to maximize domestic demand through the designation of the temporary holiday, revitalizing domestic travel and offering various discount events.”

Critics, however, said the government’s abrupt designation of temporary holidays for two consecutive years has increased economic uncertainty, causing problems in businesses’ production schedules and confusion in people’s holiday plans.

Not many wage earners could stay away from work on the temporary holiday, either. According to a survey of 350 small and medium businesses by the Korea Federation of SMEs, only 36.9 percent said they would give their workers a day off on Friday.

The report assumed half of Koreans would be off work but the number of people who opened their wallets might be far smaller than that, the critics said.