Indian workers have a productivity problem

Indian workers
Indian workers have a productivity problem

The French take their leisure time seriously. This, after all, is the country that ushered in 2017 with a law barring work email after hours. Little wonder Parisians punch into work for an average of just a little over 1,600 hours annually. Indians are an altogether more industrious lot, according to Swiss bank UBS’ Price And Earnings Report 2018. Mumbaikars clock in at 3,315 hours a year—the most of the 77 cities around the world surveyed—while New Delhi comes in fourth. The problem: French labour productivity is among the highest in the world. Indian labour productivity is emphatically not.

Economies are somewhat like Tolstoy’s unhappy families: Each is affected by unique factors. That said, it is possible to draw some broad conclusions about the links between labour productivity and economic growth. Citi GPS’ Securing India’s Growth Over the Next Decade report has analysed data from 1950 onwards for 26 economies, developed and developing. It has found that in 75% of the cases, gross domestic product growth exceeded 8% when labour productivity growth topped 6%. This was as true of post-war Japan as it was of Deng Xiaoping’s China.

India’s peak years have come much later. Between 1950 and 1980, labour productivity growth averaged a meagre 1.7%. The two decades to the turn of the millennium saw that average more than double to 3.8%. This was the period when India’s manufacturing and services sectors took off, leaching labour from the lower productivity agricultural sector. Labour productivity growth peaked at 10.2% in 2010 and has been on the decline since, making India part of the global productivity slowdown enigma. In 2016, it stood at 4.75%. This does not bode well for achieving the growth targets that are needed to raise living standards.

Source: Live Mint

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