Should Indians work more hours?

Arjun Nagarajan: I want to de-emphasise the 70-hour number. Narayana Murthy said it in the context of India being at an inflection point with the largest population and a large demographic dividend. If we miss these decades, it is difficult to move up the value chain. India cannot compare with post-war Germany and Japan (as Mr. Murthy said), but the message is about taking ownership. In the 1990s to late 2020s, Indians worked 6-7 hours per day. Germany, during its heyday (industrial revolution), worked 40% to 50% more, and South Korea in the 1980s worked 30% to 33% more. Working longer is required, but these are broad generalisations and differ across sectors.

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Anamitra Roy Chowdhury: The International Labour Organization set the working hours at eight hours a day and 48 hours a week. India ratified this. Many suggest increasing hours. But comparing it to the industrial revolution is like going back 200 years. Post-World War II Germany, facing labour shortages, brought in immigrants to rebuild the nation, which made longer hours necessary. In India, with our labour surplus, longer hours could impact unemployment. Germany now works 34 hours a week, Japan 37. But these are developed nations. Looking at our neighbours: Pakistan works 47 hours, Bangladesh 47, Bhutan 51, Sri Lanka 36, Nepal 40, while India averages 48. We must consider our labour market contextually and not just strive to exceed others, ignoring regional working hours conditions. Though not everyone in the industry may not seriously consider a 70-hour work week, its increasing prevalence in discussions is concerning. It is not in line with either developing or developed nations.

How realistic is working 70 hours a week?

Anamitra Roy Chowdhury: Working 14 hours a day for five days, or 11.5 for six days, doesn’t account for travel, which may add another two hours. The latest Periodic Labour Force Survey data indicate a significant work hours gap between genders. This is wider in rural areas, probably due to women’s additional unpaid care work. Overall, in urban and rural areas, 5.5 hours daily versus men’s 41 minutes. Increasing work hours will inherently bias the market against women. India’s female labour force participation is already one of the lowest in South Asia. Moreover, research indicates diminishing returns for extended work hours.

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Arjun Nagarajan: I agree that workers shouldn’t be pushed beyond legal work hours. Research underscores the importance of a work-life balance, mental health, and physical exercise. Moreover, work hour averages vary by industry. For example, in the U.S., which is service-dominated, leisure and hospitality average around 25 hours weekly, whereas manufacturing is about 45 hours. In South Korea, the disparity is greater; transport and food services may reach 75 hours, while education is around 40. This shows that development stages and industry sectors — service or manufacturing — impact these averages. China, during its 1990 to 2012 manufacturing- and export-focused phase, saw increased work hours with negative outcomes. So, I’m not advocating that. I’m just saying it’s crucial to consider a country’s economic drivers and industry when evaluating work hours.

While Germans and the Japanese worked longer hours after World War II, in the following years, their productivity increased due to better technology and their working hours dropped sharply. But for the past 50 years, India’s productivity has been snail-paced. Will working longer hours compensate for this?

Arjun Nagarajan: In discussing India’s aim for a $5 trillion economy, the overlooked factor is often the exchange rate. In 2019, the output per worker was $74 for the U.S., $69 for Germany, and $8.7 for India. Converting these figures to local currencies for 1990, 2000, 2010, and 2019, you see different growth rates. From 1990 to 2019, the U.S. saw a 63% increase in productivity, Germany 59%, and India nearly nine times.

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Anamitra Roy Chowdhury: Productivity data are better measured per hour, and in purchasing power parity terms, which reflects local prices. Different countries work different hours, so productivity should be assessed per hour, not per worker. In 2017, productivity per hour was $8 for India and $69.8 for Germany. A German worker, working about 5.72 hours a day, is 8.7 times more productive than an Indian worker. To match this, an Indian worker would need to work 52 hours a day, which is impossible. Chinese workers were 1.44 times more productive than Indians. They work 46 hours a week; if we adjust for productivity. To match this, Indians should work for 66.24 hours. That is where, I think, the 70-hour mark comes from.

Competing with China on hours brings us to unit labour cost, the labour cost to produce one unit of output. To calculate it, multiply the wage by the labour required per unit of output. This is the inverse of labour productivity, which measures output per unit of labour. If one country’s labour productivity is double another’s but the wages are the same, the more productive country has half the unit labour cost. To compete, the other country must either halve the wages or double the work hours to offset lower productivity. Therefore, asking for 70 hours of work without a wage increase effectively reduces wages, which is not viable.

The India Innovation Index report by NITI Aayog said that the gross expenditure in 2018 on R&D as a percentage of the GDP was 0.67%, one of the lowest in the world. How big a role does investment in capital and R&D play in increasing worker productivity?

Arjun Nagarajan: When comparing productivity in India with developed countries, we overlook the fact that those countries have higher automation and wages due to smaller working populations. India, being capital-starved, has a savings-investment gap mirroring the current account deficit. The priority is to optimise infrastructure and industry operations. Introducing artificial intelligence and technology could enhance worker efficiency. So, the short answer is that increasing capital investment is key to boosting worker productivity.

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Anamitra Roy Chowdhury: Productivity should be measured by output per hour worked. It increases with higher capital accumulation and better technology, improving capital productivity. Since workers can’t invest, the onus is on investors and industrialists to enhance productivity. The ideal growth strategy is to invest in raising productivity per hour, thereby reducing unit labour cost and becoming globally competitive with increased exports. This contrasts with the less desirable method of suppressing wages, which India has tended to follow. There are only so many hours that can be extended and wages that can be suppressed before negative impacts occur. Notably, wages are not just costs; they fuel consumption too.

Is it possible to maintain work-life balance while increasing worker productivity?

Anamitra Roy Chowdhury: India has a severe job crisis. The current employment structure is worrying, with a modern economy expected to have more wage labour and less self-employment. Yet, self-employed individuals make up 57% of the workforce, of which 18% are ‘unpaid helpers’. The organised sector, despite only employing 10% of the workforce, contributes 45% of the output and needs expansion to boost productivity. In a subsistence crisis, work hours may increase under pressure, necessitating strict enforcement of labour laws or external interventions to maintain work-life balance.

Business Matters |Is Narayana Murthy right in asking youngsters to work 70 hours a week?

Arjun Nagarajan: Completely agree. Formalisation is the most important and has to happen in an organic fashion. Second, enforcing labour laws is crucial. Over and above that, what really changes the equation is leadership. Apart from the wage part of it — and wages have to be on a par with the amount of work or hours that you put in — an empathetic leadership makes a world of a difference, where the employee feels one with the firm, he loves the work that he does. Then the number of hours become a little secondary because you know you’re working towards a different goal, that your needs are taken care of.