Making sense of the employment challenge – Can India Simply Work Longer Hours to Achieve Economic Growth? A Critical Analysis | 21 November 2023 | UPSC Daily Editorial Analysis

What's the article about?

• It talks about issue of work hours in India and global practices associated with it.

Relevance:

• GS3: Indian Economy and issues relating to Planning, Mobilization of Resources, Growth, Development and Employment

Context:

• In a recent statement, N.R. Narayana Murthy, the founder of Infosys, proposed that Indians work longer hours, specifically a 70-hour workweek, to boost India's national output. While his proposal may seem like a straightforward solution to economic growth, it is essential to critically examine the validity of this suggestion and consider alternative strategies for India's economic development.

Analysis:

• Role of Demand in Determining Output and Employment:
  • Contrary to Murthy's assertion, output is not solely determined by the number of hours worked.
  • Instead, it is aggregate demand, the overall demand for goods and services, that drives output and, consequently, employment.
  • This implies that merely exhorting workers to work longer hours will not guarantee increased employment if there is insufficient demand for their labor.
• Experience of Post-War Germany and Japan: A Misleading Comparison:
  • Murthy's reference to Germany and Japan's post-World War II economic resurgence as a justification for longer working hours is flawed.
  • These countries' remarkable recovery was primarily driven by the unique circumstances of the aftermath of war, which created an exceptionally high demand for labor in the rebuilding process.
  • Additionally, they received substantial financial assistance from the Marshall Plan, which further fueled their economic growth.
• Case of South Korea: A Dictatorial Approach:
  • South Korea's economic success, often cited as an example of long working hours driving growth, is also an incomplete narrative.
  • While it is true that Koreans worked long hours during their economic rise, this was largely due to a combination of external factors such as significant foreign aid and internal factors such as a strong nationalistic spirit and a government-led approach to economic development.
• Significance of Productivity and Domestic Market Expansion:
  • The experiences of Germany, Japan, and South Korea cannot be directly applied to India's current economic situation. India's path to growth lies in enhancing the productivity of its workforce and expanding its domestic market.
    • Enhancing Productivity: India's workers need to be equipped with the necessary skills and infrastructure to improve their productivity and compete globally. This includes investments in education, healthcare, and infrastructure development.
    • Expanding Domestic Market: Expanding the domestic market requires addressing the issue of low agricultural productivity. By lowering food production costs, the real income of Indian households would increase, leading to higher demand for non-agricultural goods and services, stimulating overall economic growth.

Way Forward:

• While longer working hours may have contributed to economic growth in specific contexts, it is not a universally applicable solution. India's economic development should focus on enhancing productivity, expanding the domestic market, and ensuring fair labor practices.