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Economy
Mahesh

03/11/23 08:47 AM IST

Understanding worker productivity

In News
  • Infosys founder N.R. Narayana Murthy sparked a debate recently by urging young Indians to work 70 hours per week, citing Japan and Germany as examples of countries that grew because their citizens worked harder and for longer hours to rebuild their nations in the aftermath of the Second World War.
Work Productivity
  • The only conceptual difference between the two is that the ‘work’ in worker productivity describes mental activities while the ‘work’ in labour productivity is mostly associated with manual activities.
  • Productivity of an activity is usually measured as the quantum of output value per unit of labour (time) cost at a micro level.
  • At a macro level, it is measured in terms of the labour-output ratio or change in Net Domestic Product (NDP) per worker in each sector (where working hours are assumed to be 8 hours per day).
Productivity
  • Productivity in a more sophisticated usage is an attribute not of time but of skill.
  • Human capital including education, training, nutrition, health etc., enhances the ability of labour to become more productive, or churn out greater quantum of value within the same number of working hours.
  • Based on this understanding, the reduction in the number of working hours does not hamper the value of output produced, but in turn enhances the leisure and quality of life of workers in real terms, while the value added to the economy could still be increasing, nominal wages remaining the same.
Link between worker productivity and economic growth
  • While an increase in productivity made through any sector is likely to affect the value added and the accumulation or growth in the economy, the relationship between the two could be quite complex.
  • If by prosperity we intend to suggest prosperity of the workers, this may or may not be true.
  • In 1980, India’s Gross Domestic Product was about $200 billion, which by 2015 exceeded $2,000 billion.
  • However, in terms of the distribution of income across groups in India,have shown that during 1980-2015, where the share in the national income of 40% of the middle income group and 50% of the low income group in India had decreased from 48% to 29% and 23% to 14% respectively, the top 10% income groups share had increased from 30% to 58%.
  • This effectively means that the income groups in the bottom 50% in India experienced an increase in their income from 1980 to 2015 by 90%, whereas income groups in the top 10% experienced an increase in income by 435%
  •  The top 0.01% has had an increase of 1699% percent from 1980 to 2015 and the top 0.001% have had an increase of 2040%.
  • The increase in incomes or the prosperity of the richest people is not quite explained by their productivity.
Comparison around the world
  • Japan and Germany are neither comparable in terms of the size and quality of labour force nor in terms of the nature of their technological trajectories or their socio-cultural and political structures.
  • India presents a unique case and any arbitrary comparison would only lead to dubious analytical inferences and fallacious policy prescripts.
  • Enhancing social investments, focusing on exploring domestic consumption potential for increased productivity with a human centric assessment of development achievements is the way to a more sustainable and desirable outcome.
Source- The Hindu

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