The Prayas ePathshala

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06 November 2024 – The Hindu

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How can the productivity of the working class be enhanced

Productivity of labour against that of workers:

  • The “work” in worker productivity refers to cerebral activities, whereas the “work” in labour productivity is mostly related to manual tasks. This is the only conceptual distinction between the two.
  • The amount of output value per unit of labour (time) cost is typically used to calculate an activity’s productivity at the micro level. Macroeconomically, it is expressed as the labor-output ratio or the change in Net Domestic Product (NDP) per worker for each sector (assuming eight hours of work per day).
  • However, it can be very challenging to measure the value of the output independently in some types of services, particularly those involving intellectual labour. For this reason, worker income is typically used as a proxy for productivity.
  • When used more sophisticatedly, productivity is a talent rather than a time-related trait.
  • Human capital, which includes things like education, training, diet, and overall health, improves workers’ capacity to produce more value in the same amount of time.
  • According to this interpretation, fewer working hours don’t lower the value of the output generated; instead, they improve workers’ real leisure and quality of life, even when nominal earnings stay the same and the economy continues to add value.

Relationship between economic expansion and worker productivity:

  • Although each sector’s productivity growth is likely to have an impact on value added and the accumulation or expansion of the economy, there may be a complicated link between the two.
  • This may or may not be true if by prosperity we mean the prosperity of the workers.
  • It is observed that the productivity of the wealthiest individuals does not fully account for the rise in their incomes or prosperity.
  • Conversely, this prosperity is either associated with the “super managerial” class, who seem to be setting their own outrageous compensation packages quite arbitrarily and unrelated to their productivity, or with hereditary transfers of wealth upon which the rich are earning yields (he called this patrimonial capitalism).

 Worker productivity in India:

  • Given that salaries are sometimes used as a stand-in for productivity, it is false to say that worker productivity in India is low.
  • Indian workers are among the hardest working people in the world, according to a multinational workforce management company with headquarters in the United States.
  • However, an international e-commerce portal called Picodi.com has noted that India is among the countries with the lowest average monthly wages worldwide.
  • Economic changes have led to an increase in informal employment in both the organised and unorganised sectors.
  • The questionable assertion of further formalisation has been restricted to adding activities to the tax system. However, neither labour standards nor working conditions have improved as a result of this.
  • Even in the official manufacturing sector, labor-intensive Micro, Small, and Medium-Sized Enterprises (MSME) predominate.
  • Research has also revealed that these businesses engage in a methodical procedure of reducing expenses by reducing wages.

Path ahead:

  • Japan and Germany cannot be compared with respect to the quantity and calibre of their work forces, their technical advancements, or their socio-cultural and political systems.
  • Any arbitrary comparison would only result in questionable analytical conclusions and incorrect policy recommendations because India is a special circumstance.
  • The path to a more desirable and sustainable conclusion is to boost social investments while concentrating on investigating domestic consumption potential for increased productivity with a human-centric assessment of development successes.

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