Monday, May 26, 2008

On holidays, vacation, PTO, and other reasons not to work

Today is Memorial Day in the US. Verilab Inc (Texas) observes today as a holiday, along with six other days. Verilab GmbH (Germany) and Verilab Ltd (Scotland), however, do not. GmbH, on the other hand, has between eleven and thirteen holidays, depending on the year. Ltd has eight. Current base vacation levels are: 17 for the US (total holidays plus vacation is therefore 25), 26 for the UK (total of 34), and 30 for Germany (total of 41 to 43). The US has six "sick" days; by contrast our European sites have no specified limit on how often you can be sick. And each of the governments of the regions all have different rules about what someone must or must be able to do with "untaken" time off. Within the US, each state has rules about that. The one thing that is common to all of them is that the time we're talking about - vacation and holiday - is paid time off.

It is, to be honest, a pain in the elbow.

It's not that time off is a bad thing. Far from it. Lets have more today for everyone please. But let's also bear in mind that there's no such thing as a free lunch (or holiday). No - the reason it's a pain in the elbow is rather the bureaucratic complexity of regulation imposed on employers for something that really isn't the benefit to employees that the governments of the world would have us think. Paid holidays aren't really paid at all.

You see, what they'd have us think is that before they imposed paid holidays on the world (even to the extent of enshrining something so trivial -- Article 24 -- alongside things as noble as rights to life and liberty -- Article 2 -- in the United Nations Universal Declaration on Human Rights) any given employee was paid an effective rate of $X per day worked, but when they didn't work, they weren't paid. And then after the advent of  paid time off, the illusion is that people are paid $X per day worked, and also $X for a given number of paid days off.

That is, of course, not at all what happens. Instead, because employers look at overall cost and overall benefit, what happens - not necessarily by overt action - is that the $X is reduced so that the same total payment is made to the employee after the paid holidays rule was made as before it. In that sense, PTO is not really P at all. The employee sees her pay for the worked days lowered so as to create a pool of cash with which to pay her for when she doesn't work. Overall, she gets paid a fixed amount. What the law concerning vacation does is simply act to remove a little bit of her freedom by trying to force her to take vacation.

This is really Economics 101. It should be obvious to anyone who has ever looked at any employer's accounts. The trouble is, 'fessing up to this makes lots of people grumpy (go on, admit it, some of you are grumpy). And in fact it makes them so grumpy, they won't vote for you if you point it out.

1 comment:

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