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Economic impact of 10-day holiday

By Ghadeer Ghloum

KUWAIT: Since the suggestion by MP Hamad Al-Obaid for a 10-day holiday in Kuwait on the last 10 days of the holy month of Ramadan, differing opinions have emerged. Some people are in support of a 10-day work suspension, while others fear it would hinder and badly affect the state’s finances. Kuwait Times interviewed three Kuwaiti economists for their opinions on this issue. Some say this can have an effect on the state’s economic stability, while others see that Kuwait’s economy is mainly dependent on oil and will not be affected much by Obaid’s suggestion.

Salman Naqi

Kuwaiti economist Salman Al-Naqi told Kuwait Times that the term “transaction costs” in economics refers to delays in procedures that can harm enterprise performance. Therefore, the parliamentary proposal for a 10-day holiday during Ramadan could create additional transaction costs for businesses and the entire state’s economy. The extended closure of government authorities could lead to significant disruptions in several phases. From the financial sector’s perspective, this could cause losses due to trading suspension at the stock market, the Central Bank’s inability to update exchange rates of foreign currencies against the Kuwaiti dinar, and confusion for banks in sorting out deposit maturity dates and liabilities.

Hajjaj BuKhadour

Additionally, since more than 70 percent of economic activities in Kuwait are dominated by the government, this holiday could suspend most activities within the economy. MPs in Kuwait need to keep track of global economic changes and propose more realistic and efficient measures in line with the state’s ambitious vision to become a global financial hub. In agreement with Naqi’s hypothesis, another economist Hajjaj BuKhadour said any suspension of workdays will hinder workers’ productivity. Giving this holiday will affect services and their cost and quality.

Therefore, such a decision should not be taken randomly. BuKhadour suggested providing shorter working hours rather than canceling them or dividing work into two parts during the last 10 days of Ramadan for people to have time to pray and worship. “Work is also considered worship in Islam, so there will be a balance and security of production, which is better than stopping work and production completely through a 10-day holiday,” he said. Economist Mohammad Ramadan said Kuwait’s financial activity is mainly based on the oil industry, and work related to the oil sector will not stop even if there was a 10-day holiday.

Mohammad Ramadan

However, employees working during these days will take higher pay because they will work on a holiday, but this will have a minor impact. With regards to the public sector and ministries, Ramadan said people’s work will be delayed and slowed, but this cannot be considered an outcome of the holidays specifically, as such things often happen even during regular days. So generally, the effect will not be considerable. If schools will be closed for a week, they will not be very highly affected either.

“There is an exaggeration on the disadvantages of this holiday, as people say it will cause a loss in a lot of opportunities when work could have been done and profit could have been earned. But for Kuwait, as mentioned earlier, the main financial source comes from oil, which is not affected by such holidays. Yes, it would be bad to a certain limit, but not as described by many people,” Ramadan said. Moreover, like BuKhadour’s suggestion, Ramadan said: “We can let some sectors work for reduced hours or by working only on the stuff that cannot be delayed, so we can lessen and shorten working hours and employees during the holiday.”

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