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Productivity in Ramadan 2011 Report

Work-hour Changes & Economic Impact:

In the Muslim-majority OIC countries, the month of Ramadan sees a reduction or an adjustment of work hours.  There are varying instances on work hours during Ramadan.  In some cases, work reduction or adjustment is government mandated.  Some countries leave scheduling at the discretion of the employers, and others mandate government office hours, while permitting the private sector to use its own discretion.

The purpose of this working-hours brief analysis is to provide a broader perspective to this report by evaluating the varying work-hour change practices across OIC countries, and their economic impact.  The evaluation highlights the different approaches in creating a balanced and flexible Ramadan work schedule.

Definition—Adjustment  vs. Reduction: An adjustment in work hours means the working day starts early (e.g. in Indonesia) and finishes early. A reduction means that the number of scheduled work hours is reduced.

Ramadan work-hour practices:  A selection of eleven OIC countries was evaluated for general differences in approach toward Ramadan work hours.  This included the six GCC countries (Saudi Arabia, Qatar, Oman, UAE, Kuwait, Bahrain), Egypt, Turkey, Pakistan, Indonesia, and Malaysia.  The table below shows each country’s Ramadan hour practices:

[table id=22 /]

Economic impact:  Conducting a thorough economic impact assessment of Ramadan work hour reduction is beyond the scope of this study.  However, we have used a basic approach using national GDP-per-hour-per day to determine the financial impact of reduced hours on each of the eleven OIC economies.

For those countries who average two hour workday reduction (GCC, Pakistan, Egypt), the total hours lost are approximately forty, which is essentially equivalent to one week of economic productivity.  Percentage-wise, this averages to a 7.7% loss in such a country’s monthly GDP value.   For those who average a one hour workday reduction (Indonesia, Malaysia), the total lost hours are twenty, which averages to 3.8% loss in those economies’ average monthly GDP value.  This assessment does not consider end of Ramadan Eid holidays.

Using this evaluation, the chart below shows estimated GDP impact to the select economies of the OIC. Although a detailed analysis of economic impact would have to be undertaken in order to understand the full complexity of the Ramadan dynamic, the above assessment does show that the economies suffer roughly 4% in monthly GDP per hour of work reduction per day.

Estimated Loss in monthly GDP due to reduced Ramadan hours
Estimated Loss in monthly GDP due to reduced Ramadan hours

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