While it may be hailed as the “race that stops a nation”, a new survey suggests the Melbourne Cup imposes a productivity cost of more than $1bn on the Australian economy.
According to the survey by H&R recruitment specialists Randstad, the cost to the economy in reduced productivity arising from lost working hours could be as much as $1.2bn. The survey of 889 Australian employees found that over half (54 per cent) take more than 3.5 hours off work on the day of the Cup while over ten per cent took the entire day off.
Official data from the Australian Bureau of Statistics shows there are about 11.2 million employees in the labour force earning an average wage of $13.40 an hour.
“If our results are representative of Australian businesses, we could be losing over $1bn in the afternoon of the Cup,” said Randstad Chief Executive Deb Loveridge.
However, while the productivity loss may exceed a billion dollars, Ms Loveridge said the negative impacts on individual organisations would be offset by a boost in staff morale, employee engagement and team building.
“While employers should be aware of the Cup’s overall effect on their businesses’ bottom-line, the long-term benefits outweigh the short-term costs,” Ms Loveridge said. “In fact, employers may damage their company culture, reputation and retention if they don’t get involved, such is the passion, excitement and anticipation around the Cup.”
The survey found that while 12 per cent of employees took the day off, about 47 per cent took part in an “office organised event” ranging from a sweepstakes to a fully catered function.
Surprisingly, the state most enthused about the Melbourne Cup is Queensland with 40 per cent of those hailing from the sunshine state taking the afternoon off and 33 per cent attending functions for the event.
South Australians were the most indifferent, with only 23 per cent saying their employers co-ordinated a function and 60 per cent saying they only took 30 minutes to watch the cup before returning to work.
With the exception of Victoria, all states and territories were against celebrating the Melbourne Cup as a public holiday. In Victoria the event is already celebrated as a public holiday with many people also taking off the Monday before race-day.
Executive Director of the Australian Retailers Association, Russell Zimmerman, told Dynamic Business that the economic boost to the economy from increased retail sales and work functions made up for the productivity drain.
“It goes without saying that tomorrow, particularly in Victoria, productivity will be reduced. I won’t say lost, I’ll say reduced,” he said. “Work’s still got to be done and people have to cram in a lot more before and after (the race).”
“(But) there is an incredibly large benefit to the retail industry. Leading up to the Melbourne Cup there are lots of people ducking out and buying clothing, footwear, hats, you name it… I notice that men’s ties are among other things that are immensely high in sales in the lead up to the Melbourne Cup.”
“Beyond the actual Cup itself, I think in every state, in every major and small town, there will be a Melbourne Cup luncheon being held. There’s a whole lot of food to add into the mix”.
The chief executive of the Victorian Tourism Industry Council, Dianne Smith, told Dynamic Business the Melbourne Cup delivered a net benefit to the economy despite the added impost of penalty rates and lost working hours.
“Everyone gains at the post at the end of the day,” she said.
Ms Smith singled out small businesses as a key beneficiary of the event. She cited the example of Hidden Secrets Tours (a small walking tour operator based in Melbourne), saying that it had received nearly 70 bookings the day before the Cup. “The tourism industry sees it as a time of economic boost,” she said.
At last year’s Melbourne Cup, 54 per cent of the 105,000 people who attended the actual event were from interstate or overseas. Ms Smith said the subsequent retail boost was enormous, with the total number of hats and fascinators sold numbering 62,814. The average retail spend on fashion items for carnival-goers was $171, Ms Smith said.
“The overall economic impact last year was measured at $364 million — just from the Cup. That’s the official economic impact statistics,” she said.