Narayana Murthy Is Absolutely Right!

Get more people working, get more people working in modern manufacturing and services in our cities, and get people working better and longer, suggests Naushad Forbes, past president, CII.

In a recent interview, N R Narayana Murthy advocated a 70-hour work-week. Our TV channels talked about it for several days on the entertainment programmes labelled as news. Then, as usual, with no conclusion, other items replaced it in the nightly lineup. That is unfortunate.

Mr Murthy has raised a vital question about national productivity. It demands wide debate supported by data and deep thought.

What Mr Murthy said: 'India's work productivity is one of the lowest in the world. Unless we improve our work productivity ... we will not be able to compete with these countries that have made tremendous progress.

'So, therefore, my request is that our youngsters must say, "This is my country. I want to work 70 hours a week".'

'You know, this is exactly what Germans and Japanese did after the Second World War.'

These comments triggered much reaction, ranging from praise to aspersions on how Japan suffered from social problems from overwork, the need for smart work more than long work, and so on.

I would argue that Mr Murthy's starting point of productivity is where we, too, must focus.

Reacting to his comments, a nice article in The Hindu by Jasmin Nihalani and Vignesh Radhakrishnan did just that.

They pointed out that the average number of hours a typical Indian spends in employment is today significantly higher than in Germany or Japan (they used to work longer).

They also say that the right comparison for national productivity is gross domestic product (GDP) per hour worked.

On this metric, the average Japanese is over four times (and German seven times) as productive as the average Indian, and increasing working hours per worker changes nothing.

So what must we do? Three things in sequence: Get more people working, get more people working in modern manufacturing and services in our cities, and get people working better and longer.

A word on development. GDP, the key measure of output in an economy, is inherently about productivity.

We have grown our population by 50 per cent since 1991, while growing our GDP 10 times, from $350 billion in 1991 to $3.5 trillion now.

The biggest growth driver as countries develop is the movement of people into better jobs. The archetype for labour mobility is a shift in employment from low-productivity agriculture into high-productivity modern manufacturing.

The fact that over seven decades after independence over half our workforce is employed in rural occupations such as agriculture and informal rural services is an indicator of slow development.

Getting people working: At 25 per cent, India has the lowest female labour force participation rate in the G20 (now even below Saudi Arabia).

The International Monetary Fund estimates that if female participation in India matched the world average of 50 per cent, we would be one-third richer as a country.

And if we equalise female to male participation (76 per cent), we would be 60 per cent richer as a country.

As work by many leading economists, such as Ashwini Deshpande and Rohini Pande, shows, increasing workforce participation is all about changing employment patterns to be more friendly to women -- providing opportunities to work near the home, establishing creches at key workplaces, and offering the flexibility that enables employment as children are born.

Getting people to work sooner: Abhijit Banerjee and Esther Duflo point out that young educated Indians, particularly men, wait for years to get a job they deem worthwhile.

They show that a quarter of all Indian males between the ages of 20 and 30 with at least 10 years of education were not working. This is not because jobs were not available.

Under 2 per cent of those under 30 with less than eight years of education were unemployed. And 2 per cent of these same educated males were unemployed when they were over 30.

So as they say, 'There are plenty of jobs, just not jobs these young men want'.

This is a massive wastage of human resource, made worse by the allure of a few government jobs (such as recently in Bihar, or the famous case in 2018 where 90,000 positions in the railways attracted 24 million applicants).

This entices the educated young to keep trying for better jobs for years until they finally give up in their 30s and settle for what they can get.

Getting people working in modern manufacturing and services: Manufacturing provides an immediate jump in productivity.

The Organisation for Economic Cooperation and Development showed some years ago that if our entire workforce of 400 million had the productivity of our factory sector, we would be 15 times wealthier with an average per capita GDP matching South Korea.

The government's focus on manufacturing is healthy, but in our keenness to foster advanced sectors such as semiconductors and clean energy, we do not adequately address the needs of labour-intensive sectors such as textiles and garments, leather and footwear, and food processing.

Consequently, a large garment factory in India employs 3,000 to 5,000 people, against 30,000 to 50,000 people in our neighbour Bangladesh.

And the employment-intensive service of tourism remains our biggest missed opportunity; with 18 million foreign visitors pre-pandemic in 2019, we were country #25 in the world tourism rankings.

We need to grow tourism five times to match country #1, France, with its 90 million-plus foreign visitors. (Given that France has a population one-twentieth of ours, I will leave the potential in matching them in foreign tourists per capita to the reader's imagination!)

Mr Murthy is absolutely right to identify productivity as our key national priority. This article has argued that we must first get more people working in anything, and then drastically grow the number of modern jobs in manufacturing and tourism.

And to come back to the comment on a 70-hour work week, some of us, fortunate enough to be employed in modern occupations (as for most readers of this newspaper), should be inspired by Mr Murthy's comment and indeed work harder and longer.

There is so much space and such a huge need everywhere in our country for us to contribute, with our biggest contribution being to get more of India working.

A real debate around these issues in this election season would make for such a healthy campaign by both the government and Opposition. It is, in the end, all about productivity.

Naushad Forbes is co-chairman, Forbes Marshall, past president, CII, chairman of the Centre for Technology Innovation and Economic Research, and Ananta Aspen Centre. His book, The Struggle and the Promise, was recently published by HarperCollins.

Feature Presentation: Ashish Narsale/Rediff.com