Infosys chairman N.R. Narayana Murthy sparked a debate last week by urging young Indians to work 70 hours per week, which translates to about 12 hours of work per day assuming a 6-day work week, to develop the country. He cited 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, and further noted that India’s worker productivity is one of the lowest in the world.
Mr. Murthy’s concern about low worker productivity in India is valid. Low productivity affects economic output and the standard of living in any country. However, the tech billionaire wrongly attributes India’s low worker productivity to the number of hours worked by Indians when the real problem lies elsewhere.
It is true that countries such as Japan and Germany did see a rise in average working hours, albeit temporarily, after the Second World War. Japan saw annual average working hours per worker rise from 2,030 hours in 1950 (earliest year for which work hours data for the country is available) to a peak of 2,175 hours in 1961. But in the case of Germany, the rise in average working hours after the Second World War was much shorter with the annual average working hours per worker peaking at 2,427 hours in 1950.
But this rise in annual working hours does not explain why these countries grew rich while other developing countries stayed poor. Germany saw its annual average working hours per worker figure steadily decline from 1950 onwards. Yet German per capita income grew steadily in the second half of the 21st century. From the 1960s, the annual average working hours of the Japanese started to gradually decline each decade yet growth did not suffer until much later, due to other reasons. Further, evidence does not show that the average Indian worker worked much less than the average Japanese or German in the past or the present. In 1970 (the earliest year for which work hours data for India is available), the average Indian worker worked about 2,077 hours per year and this figure has remained quite stable till date. In 1970, the average German and Japanese workers worked 1,941 hours and 2,137 hours, respectively. In fact, from the 1960s to the 1980s, when Japan witnessed fast economic growth rates, the annual working hours there was pretty much the same as in India. In 2017, annual working hours stood at 2,117 hours in India versus 1,738 hours and 1,354 hours in Japan and Germany, respectively.
Historically, a fall in annual work hours has been a marker of economic progress rather than economic stagnation. Most countries that began to industrialize early saw the average number of hours clocked in by their workers decrease steadily over the last 150 years as economic output and living standards rose. In 1870, workers in most countries clocked over 3,000 hours per year. Today, work hours in these countries has roughly halved. It should be noted that, generally speaking, there is disutility or psychic pain associated with work (which is why people demand wages as compensation for the psychic pain they incur). People in pre-industrial societies had no choice but to work more than 3,000 hours per year because it was necessary for their survival; the pain of losing their life was greater than the pain of working excruciatingly long hours. But as economic output and living standards rose with the rise of industry and technology, people had fewer reasons to work long hours and could afford to take it easy.
But this raises an important question: how do workers in modern economies produce far more economic output, and thus enjoy far higher standards of living, while actually working far fewer hours? This is the result of the rise in worker productivity (defined as output divided by man/person hours worked) as workers today have far more capital equipment to work with than their predecessors. A fisherman today, for example, can catch far more fish in far fewer hours using an advanced capital tool like a fishing trawler than his ancestors could with rudimentary nets.
Indian workers, as the data cited earlier show, do not actually lag behind other countries when it comes to clocking in long hours at work. What they really lack is sufficient capital that can help boost their productivity. As of 2015, India’s worker productivity stood was $6.46 per hour compared with $36.22 in Japan and $59.77 in the United States. Building capital to boost worker productivity requires investments, which are funded by savings. But the channelling of savings into investment can happen, as institutional economists such as Douglass North have argued, only when a country has strong institutions such as an independent and efficient judiciary. India lags the West on this count, which explains India’s low worker productivity when compared with the West and points to the need for reforms. Even though India’s worker productivity has risen since the 1991 economic reforms, the pace of its growth has significantly dropped since 2016.
Mr. Murthy’s comments come in the backdrop of the push by IT companies to get their employees back to office since the end of the pandemic. Stanford economist Nick Bloom recently noted that economic research shows that work-from-home saves costs for companies and also improves worker output. In fact, U.S. worker productivity has accelerated since the pandemic as more Americans started working from home. Yet India Inc. has been slow to recognize this trend and even seems keen to reverse it.
