FLEXIBLE PUBLIC HOLIDAY ARRANGEMENTS: AN EXAMPLE OF AN EFFICIENCY WAGE

Workers value flexibility, as it provides them with a better work/life balance among other things. Hence the advantage of the flexible public holiday arrangement which, done properly, can be a win-win solution that increases productivity and strengthens workers’ wellbeing.

by Fabrizio Carmignani and Ambika Zutshi

We value our employees’’, ’’Employees are our biggest assets’’, ’’Employees are invaluable for us’’, etc. Phrases such as these are common across company websites and other public-facing communication. Nonetheless, how does an employer demonstrate that they value their employees? This question has been answered in myriad ways by different disciplines (see, for instance, Shields et al. 2015). Economics, in its neoclassical version, provides what is possibly the least compassionate answer: by paying a wage equal to the marginal productivity of the worker. This can be further compounded by the sentiment (rightly or wrongly) across current and potential workers that they can be replaced anytime with another worker for lower pay and benefits. However, employers generally behave differently and pay an efficiency wage that is sufficiently high to induce the workers…

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The European Business Review (Digital) - 1 Issue, May/June 2024

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