Thanks to Pope Gregory XIII’s overhaul of the shoddy Julian calendar in 1582, 2024 is a leap year. Relative to 2023, England will see three extra working days this year: one for the leap year day of February 29th, one due to the lack of a coronation, meaning fewer public holidays, and one less weekend day. This brings the total number of working days up to 254 in 2024. Wales will be the same, while Scotland moves from 250 to 254 and Northern Ireland from 249 to 253.
Intuitively, we might expect a positive impact on 2024 output and profits with an extra day worked. Even if these effects are adjusted out of official GDP figures [1], there is a case to be made that businesses may simply ‘feel’ better off due to an extra day to generate revenue, which could have ensuing economic impacts.
However, since some prices are charged on an annual or monthly basis, there may be some cases where the effect is distorted, not being as simple as just an extra day to produce earnings. The most notable prices of this sort are salaried payments to workers, which are most commonly paid on a monthly basis, in contrast to non-salaried wages, which may be paid on an hourly or piece rate. Those in the former group are likely to be negatively affected by next week’s leap year day, since their fixed earnings must stretch for a longer period than usual. Meanwhile, those in the latter group will see a boost to their usual February pay packet.
How large will these effects be in the UK? Salaried workers make up a majority of those in employment, so the effects here will be more significant. However, the boost to pay amongst those in the latter group could still be substantial. Using data from the International Labour Organization on the share of workers by pay type and assumptions about the distribution of non-salaried workers between sectors, we estimate that this group will earn £530 million more due to the extra day.
Disaggregating this figure, we estimate that the average UK non-salaried worker will earn an extra £125 on February 29th. Though the bulk of this will be absorbed by daily living costs, there will be gains across certain goods and services that are covered by monthly or yearly payments, such as rent, gym memberships, and subscriptions. Compared to a standard February, the price per day for these categories will be lower.
Using data from our Income Tracker, published by Asda, we estimate that the cost of essentials for the average household will be £87 a day in 2024 which, given some assumptions, works out at roughly £36 a day per person. So, the average non-salaried worker will be around £89 better off on net due to the extra day next week, while also reaping the benefit of a free day of listening to Spotify at AverageGym. On the flip side, the £36 daily cost figure captures the loss faced by salaried workers, whose February earnings must spread across more days than is usually the case.
The pattern of this effect will differ internationally. The UK has a relatively high proportion of its labour force on annual or monthly salaries, although still beaten by countries such as Norway and the US. At the other end of the scale are countries such as Indonesia and India, where hourly or piece rate pay remain much more common. Such countries will see relatively larger increases in unadjusted February earnings. However, what really matters for consumers is whether other prices are sensitive to the leap year.
Since we are talking about a small fraction of the year’s pay and cost of living, the distortionary effects will likely be small. In any case, this remains far less likely to be economically impactful than the seasonal wanderings of a lunar calendar. So, we conclude that sticking with solar is still the way to go!
[1] Even without coronations and leap years, the number of working days will vary year on year. The ONS adjusts for these calendar effects by controlling for changes in the number of working days in a month using clever regressions. This means that calendar and seasonally adjusted 2024 GDP figures should be comparable between years despite the extra days. We also presume they control for previous month working days to mop up any income effects felt in March induced by the slightly fatter February pay checks.
For more information contact:
Lucas Gibbard, Economist
Email: lgibbard@cebr.com Phone: 020 7324 2843
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