Giving workers more public holidays and raising their wages could boost the British economy, according to a report by the New Economics Foundation.
Productivity – economic output per hour of work – has failed to grow each year at the rates seen before the financial crisis.
As part of efforts to improve Britain’s productivity track record, the foundation said the government should drive up the minimum wage faster than already planned and ramp up spending on public services by as much as £32bn a year by the mid-2020s.
Workers should get a national weekly allowance worth £2,500 a year instead of the tax-free personal allowance, while the government should create a new body to provide guidance on raising the number of UK public holidays.
British workers have among the fewest paid days off in Europe. The UK minimum is 28 days, while in the EU it ranges from 30 to 40 days.
The thinktank suggested that years of austerity and weak wage growth had eroded demand, with an impact on UK firms’ investment plans.
Alfie Stirling, the head of economics at the foundation, said: “Raising demand by putting more cash in the pockets of the UK’s poorest workers, while giving people more paid time off from work to spend it, should now be part of a radical mix of options for any government that is serious about increasing productivity in a way that works for people and society.”