Investing more in people

Infosys co-founder Narayana Murthy recently stirred a debate by urging young Indians to embrace 70-hour work weeks (i.e. almost 12 hours per day, considering Sunday as a holiday) to compete with economies that have made tremendous progress in the past 2-3 decades. 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 those countries that have made tremendous progress. So, therefore, my request is that our youngsters must say ‘This is my country. I’d like to work 70 hours a week.”

However, “Productivity isn’t everything, but in the long run it is almost everything,” wrote Paul Krugman more than 26 years ago. “A country’s ability to improve its standard of living over time depends almost entirely on its ability to raise output per worker.”

His inhuman statement resonates with many in our fast-paced world and has received both applause and brickbats. However, endorsing Murthy’s advice, the lawyer-politician Congress leader Manish Tewari said that several public representatives like him work 12-15 hours a day without taking a day off. However, he did not tell how in parliament and assemblies, times are unproductively used by our people’s representatives.

Yes, many people work more than 12 hours for the development of society but why should one work 12 hours for a company everyday? However, one should prepare to work for twelve hours for his/her own employers but it should be occasional and when there is any emergency. If one is made to work 12 hours regularly, then the work-life balance will be disturbed leading to anxiety, depression, suicide, destruction of family life, divorce, suicide, social upheaval, criminal activities, lifestyle, and dreaded diseases, children and aged persons will be neglected.

The  productivity of future generations will be dampened while trying to enhance the productivity of present youths. Due to a 70-hour work week, women will have no choice but to quit jobs as men are never going to share the load of housekeeping, caregiving, and childrearing. This will further exacerbate the already low female labour force participation rate in India. The working class in our country has already been facing hardships due to the perfidious anti-labour policies of ruling establishments. The longer working hours will exacerbate their plights.

ILO also recognizes that workers with long hours and heavy workloads report reduced job satisfaction, and motivation, and higher rates of absenteeism and turnover, as stated in the ILO’s 2018 report on working time and the future of work.

But nobody should forget that those corporate CEOs and politicians do not work for the nation but for personal gains and self-aggrandizement. Corporate behemoths amass wealth while politicians enjoy unbridled power and popularity.

They have power, and money and lead a comfortable life. Everything is available at doorsteps. No worries about health, education, or housing as they have many bungalows, costly cars, drivers, cooks, servants, and family doctors to make life comfortable. Police protection and old age security are easily available.

The International Labour Organisation (ILO) has clarified that no national law in any country mandates a 70-hour work week. India was among the first nations to ratify ILO Convention 1 in 1921, setting a standard of eight working hours a day and 48 hours a week for industrial work. Before the adoption of ILO Convention 1, many countries globally adhered to a standard workweek of 60 hours. We are talking about 70-hour week, when developed nations are shifting towards the ILO’s recent convention, which stipulates a 40-hour workweek.

As the debate rages on, it’s worth noting that an analysis of ILO data alongside corresponding GDP (Purchasing Power Parity) per capita figures reveals an intriguing pattern. There seems to be an inverse correlation between prosperity and weekly working hours, meaning that countries with shorter working hours tend to have higher per capita GDP.

Take the instance of Switzerland. A Swiss worker works an average of 31.6 hours per week. The Swiss GDP per capita is $93,421 . France has the shortest work-week among top economies at 30.1 hours but boasts one of the highest per capita GDP figures at $55,493  indicating a more productive and prosperous economy. India has lower per capita income despite higher working hours.

But who will be the beneficiaries of longer working hours? Not country but CEOs of various companies who deliberately take huge salaries. Now CEO of Infosys’ annual package is more than Rs 56 crore. Further, India’s top executives earn amazing salaries, far exceeding the average pay of their employees. These extraordinary individuals not only lead prominent conglomerates but also command some of the highest incomes in the Indian business realm as reported by certain media.

In 2021-22, C Vijayakumar, the CEO of HCL Technologies Ltd stands out as one of the most highly compensated top executives in the Indian IT industry with an annual package of Rs 131.08 crore followed by other CEOs such as Thierry Delaporte, Wipro (Rs 82.02 crore in 2022-23 ), CP Gurnani, Tech Mahindra (Rs 63.4 crore in 2021-22) , S.N. Subrahmanyan, Larsen & Toubro (Rs 61.24 crore-2021-22), Salil Parekh, Infosys (Rs 56.45 crore in 2022-23), Rajiv Bajaj, Bajaj Auto (Rs 39.86 crore in 2019-20) among others.

While the median annual pay of CEOs zoomed 835 percent from Rs 3.37 crore in 2011-12 to Rs 31.5 crore in 2021-22, the median salary package of freshers grew just 45 percent from Rs 2.45 lakh to Rs 3.55 lakh in the same period.

Labour productivity is usually measured by GDP per labour hour. The low productivity can depress wages, but in recent decades, wages haven’t grown as much as expected even during periods of robust economic productivity growth. But crores of workers, people work in wretched conditions with meagre wages and are fully uncertain of the future. Many of them are deprived of a decent life and struggle to eke out a basic existence. They do not have any facilities enjoyed by corporate behemoths, the rich, and politicians.

The  data also shows that Indians are already among the hardest workers globally. Surprisingly, data from the International Labour Organization (ILO) reveals that Indians are already among the hardest workers globally, dedicating an average of 47.7 hours per week per employed individual as of 2023. Only seven countries such as Qatar, Congo, Lesotho, Bhutan, Gambia, and the United Arab Emirates have higher average working hours than India.

A report by the International Labour Organisation (ILO) in 2021 also revealed that an average worker works 46 hours a week in China, 36 hours in the United Kingdom, 37 hours in the United States, and 36 hours in Israel, which is less than that of India. The minimum statutory wage of an Indian worker is also the lowest in the world, barring some sub-Saharan African countries.

The annual PLFS report of 2022-23 also portrays deplorable state of regular workers in India. Within the regular waged/salaried employees, 58.6 percent of the workers do not have any written job contract. In the urban segment, such workers account for 56% of the total waged and salaried employees. Out of the regular wage/salaried employees, 46% are not eligible for any paid leave and 53.9 % are not eligible for any sort of social security benefits.

Even a 54%  of the Indian salaried class is finding itself uncovered by any kind of social  security benefits in 2022-23 compared to 52% five years ago. The share of those employed in salaried jobs on regular work has contracted in 2022-23 to 21% compared to 23% before the pandemic in 2019-20. No need to tell the plight of casual labour and self-employed workers in different quarters.

On average, the wages of casual workers per day increased by a skimpy margin of 1.26% from Rs 398 in January-March 2023 to Rs 403 in April-June 2023. Similarly, in the case of self-employed workers, in the same periods, the gross monthly earnings increased by 2.9% from Rs 12,972 to Rs 13,347.

However, during the same reference period, the average CPI inflation was 4.6% which means that the real income (nominal income -inflation) of the working people actually declined during this period. No need to tell the plight of workers in the informal, unorganized sector.

India has a problem with unemployment and underemployment that pulls down its labour productivity. Disguised unemployment in agriculture contributes to negligible labour productivity. Low female participation in the wage-earning labour force is another contributory factor. Both need solutions that go beyond the willingness to work. China addressed this by moving an enormous army of workers from farms into labour-intensive factories. India is trying to follow that example, but with less resolve.

Formal jobs are not being created at the rate to absorb new entrants to the labour force, which in itself pulls down productivity. Self-employment is challenged by access to capital.

Prevalence of widespread corrupt practices had long been a formidable barrier for achieving efficiency in every sphere of human life and business operation on the Indian soil. Inefficiencies of India’s infrastructure, logistics and supply chains, and corrupt practices, put a considerable burden on achieving cost efficiencies for businesses operating in India, leading to low productivity and increased cost of production.

All of this raises a chicken-or-egg question: Are we suffering from low productivity because we have underinvested in human capital? Or are we unable to invest in human capital because structural factors are permanently reducing productivity?

In an article titled “The Case for Investing More in People” published in Harvard Business Review, (04 September 2017), Eric Garton says, there is a virtuous cycle between productivity and people. Higher levels of productivity allow society to reinvest in human capital (most obviously, though not exclusively, via higher wages), and smart investments result in higher labour productivity.

New evidence shows we could reinvigorate productivity if we stopped underinvesting in human capital. Beyond wages, other forms of investment in human capital include education and training, improved healthcare, and other, less obvious investments, such as the time and space to explore new ideas and professional development opportunities.

We know that great ideas that drive breakthroughs in productivity come from human beings with the time, talent and energy to innovate.

Eric Garton and Michael Mankins are also co-authors of Time, Talent, Energy, released in March 2017. This book  presents research into how businesses can liberate people’s time, talent, and energy and unleash their organizations’ productive power. Both found that investments in time, talent and energy do indeed pay off.  The top-quartile companies in their study unlocked 40 percent more productive power in their workforce through better practices in time, talent, and energy management.

Perhaps the most transformational thing a company can do for its workforce is to invest in creating jobs and working environments that unleash intrinsic inspiration. This is the gateway to the discretionary energy that multiplies labour productivity. An inspired employee is more than twice as productive as a satisfied employee and more than three times as productive as a dissatisfied employee.

One step to raise productivity is to start treating hours like dollars, with a real opportunity cost. Companies should seek to systematically eradicate organizational drag — all the internal complexity that leads to inefficient and ineffective interactions. Giving managers more time to do deep thinking can unlock innovations that can have a significant impact on productivity.

Creating inspiring jobs and engaging working environments requires holistically addressing the factors that drive employee inspiration. This includes more autonomy and agility as well as leadership.

The human capital, not financial capital, is often is scarcest resource. Reinvesting in this scarcest resource could unlock new levels of labor productivity for the economies and companies around the world that are sorely in need of it.

Robert Gordon, a macroeconomist at Northwestern University, has shown that periods of breakout productivity in the United States were not the result of capital deepening (applying more capital to each hour of labor), but of what economists call total factor productivity, a catch-all measure for the impact of technological innovation.

According to articles published in Harvard Business Review, the command-and-control management style has been on the decline for decades. Research shows that companies perform better when leaders empower, encourage, and coach employees instead of delivering orders, micromanaging, and meeting out discipline. Failure to acknowledge an employees’ mental health can hurt productivity, professional relationships, and the bottom line.

To improve productivity, it is imperative to encourage growth mindsets. Carol Dweck (January 13, 2016) the Lewis and Virginia Eaton Professorship of Psychology at Stanford University says just espouses a growth mindset, and good things will happen. A growth mindset is just about praising and rewarding effort. Individuals who believe their talents can be developed (through hard work, good strategies, and input from others) have a growth mindset. They tend to achieve more than those with a more fixed mindset (those who believe their talents are innate gifts).

Scholars are deeply gratified when their ideas catch on. And they are even more gratified when their ideas make a difference — improving motivation, innovation, or productivity, for example. But popularity has a price: People sometimes distort ideas and therefore fail to reap their benefits.

India is limping backwards as health and education becoming unaffordable. India has been ranked at the 116th position out of 180 countries in the 2020 edition of the World Bank’s annual Human Capital Index that benchmarks key components of human capital across the country. The Index compares critical aspects of human capital in different countries.

Further, India ranks 132 out of 191 countries and territories on the 2021/22  Human Development Index. Human Development – a measure of a nation’s health, education, and average income – has declined for two years in a row. In brief, working longer has no link with productivity, rather investment in human capital, provision of better wages, facilities, proper training boost up productivity.