Solutions

Increase statutory paid leave

Increase statutory paid leave

If pay is protected, increased leisure time for workers will boost demand and life satisfaction.

A new Working Time Commission should make annual recommendations to government on regular increases to annual statutory leave entitlement. This body would need to collaborate closely with the Low Pay Commission, or it could sit within the Commission itself. To reflect the fact that reducing working hours can create a virtuous circle between increasing productivity and helping to ensure that productivity gains themselves lead to social, economic and health benefits for workers, we propose the new body or Commission be given two phases to its mandate.

For the first phase, the Commission would be asked to recommend annual increases in paid statutory leave that are as large as possible, subject to not increasing unemployment. The first mandate would remain in place until government believed that the scope for a demand-side response to the UK’s productivity puzzle had been exhausted.

Once this phase was complete, the new Commission could be given a new normal times’ mandate to recommend a more steady increase in statutory leave to remunerating workers in the form of paid time off consistent with sustainable, long-term increases in productivity.

During both phases, government could also use the opportunity afforded by higher paid leave to announce new bank holidays spread evenly throughout the year, helping to bring the UK more closely in line with the rest of Europe.