Economic effectiveness of extended holiday called into question

Containers are stacked at a port in Busan, a major export hub, on April 30. Yonhap

A government policy broadly aimed at stimulating economic growth by increasing the number of public holidays is facing renewed scrutiny after exports dropped sharply in the first 10 days of May. The decline has been attributed to a reduced number of working days compared to previous years.

The policy involves designating regular workdays as additional days off, aligning them with weekends, national holidays, Seollal (Lunar New Year), Chuseok (the mid-autumn harvest festival) and other public holidays, thereby giving workers more consecutive days of rest.

However, the policy has been criticized for failing to effectively boost domestic demand, as many people choose to travel abroad during the extended holidays and spend their money overseas.

“Under the circumstances, the decline in exports possibly suggests that the holiday is not helping much to revitalize the economy,” said Inha University economics professor Shin Il-soon, highlighting exports and domestic demand as two key drivers of economic growth.

He also referred to data from the Korea Customs Service, which showed that exports plummeted by 23.8 percent from May 1 to 10 compared to the same period a year earlier.

This year, the period coincided with a four-day holiday break from May 3 to 6.

A weekend was followed by May 5 (Children’s Day), which overlapped with Buddha’s birthday. Under the policy concerning substitute holidays, May 6 was also designated a holiday.

Shin Se-don, professor emeritus of economics at Sookmyung Women’s University, said that "it is not clear” whether the extended holiday is primarily responsible for the decline in exports.

He also pointed out that Korean businesses have been cautious about U.S. exports due to a 25 percent "reciprocal" tariff, which is currently being discussed in ongoing negotiations between Korea and the United States.

Still, the professor warned about the negative effects of "a populist holiday policy" as a means of bolstering the economy.

“The authorities seem to have an excessively positive belief toward a longer holiday break in relation to public livelihood,” he said. “The policy may be good to attract the public, especially workers, for the election, but it won’t enliven their livelihood after all.”

A civic activist group, Citizens' Coalition for Economic Justice, noted that small business owners have “felt little effect” from the extended holiday that used to occur in past months.

For instance, the country had a six-day holiday — from Jan. 25 to 30 — for Seollal, after the government designated Jan. 27 as a temporary holiday. During that period, an estimated 3.4 million people traveled abroad, leading to a downturn in sales for small business owners in the service and travel sectors.