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Worker Productivity


Infosys founder N.R. Narayana Murthy has stirred debate by encouraging young Indians to work 70 hours per week, drawing comparisons with Japan and Germany’s post-World War II efforts to rebuild. Murthy expressed concern over India’s low worker productivity levels, emphasizing the need for increased work hours to boost the nation’s growth prospects.


GS III: Indian Economy

Dimensions of the Article:

  1. Worker Productivity and Labour Productivity
  2. Relationship Between Worker Productivity and Economic Growth
  3. India’s Worker Productivity and Global Comparisons

Worker Productivity and Labour Productivity

  • Productivity measures the output value per unit of labor cost at a micro level.
  • At the macro level, it’s assessed as the labor-output ratio or change in Net Domestic Product (NDP) per worker, assuming 8 hours of work per day.
  • Worker productivity focuses on mental activities, while labor productivity relates mainly to manual tasks.
Challenges in Measuring Output Value:
  • Intellectual labor services make it difficult to independently measure output value.
  • Worker income is often used as a proxy for productivity.
  • Mr. Murthy’s assertion that additional work with no corresponding pay leads to increased profits at the expense of workers is debated.
Role of Skill, Technology, and Innovation:
  • Productivity is not tied to time but skill, encompassing education, training, nutrition, and health.
  • Reducing working hours can enhance leisure and quality of life without compromising output value.
  • Technological advancements and innovations can increase productivity without extended work hours.

Relationship Between Worker Productivity and Economic Growth

Overall Impact on Economy:
  • Increased productivity in any sector can contribute to economic growth by raising the value added and overall accumulation in the economy.
Complex Relationship:
  • The link between worker productivity and economic growth is intricate, as it’s influenced by various factors.
Challenges in Measuring Productivity:
  • Issues related to measuring nominal output, output prices, labor input, capital stock, and capital stock prices can impact the accuracy of productivity measurements.
Prosperity of Workers:
  • The connection between productivity and prosperity, especially for workers, is not straightforward.
  • Worker prosperity may not solely depend on hard work or productivity.
  • Super-rich individuals’ prosperity can be attributed to factors like inherited wealth (patrimonial capitalism) or high salaries determined by a select group, regardless of actual contributions.
  • This disconnect between effort and earnings raises concerns about the fairness of the capitalist system.

India’s Worker Productivity and Global Comparisons

Challenging Productivity Inference:

  • Using income as a proxy for productivity can lead to a misleading inference about India’s worker productivity being low.

Income and Productivity Trends:

  • Trends in India show decreasing wages and salaries alongside increasing profits since the 1980s.
  • Factors contributing to this trend include the rise of informal jobs, changes in labor laws, and rules that may not favor workers.

Hardworking Indian Employees:

  • India has a reputation for having some of the hardest working employees globally.

Low Average Wages:

  • Despite being hardworking, India ranks among the lowest in terms of average monthly wages on a global scale.
Comparing India to Japan and Germany:
  • Drawing comparisons between India’s economy and those of countries like Japan and Germany may not be particularly insightful.
  • These countries differ significantly in terms of their workforce, technology, culture, and political systems.
  • India’s uniqueness requires avoiding random comparisons that could lead to incorrect conclusions and ineffective policies.
  • Instead, the focus should be on investing in society, boosting domestic spending, and prioritizing development that places people’s welfare at the forefront, leading to more favorable and sustainable outcomes.

-Source: The Hindu

December 2023