Looking for soft targets

One of India’s most successful entrepreneurs, Infosys founder NR Narayana Murthy has suggested that employees working longer hours will generate significant tailwinds for the Indian economy. An analysis of India’s official labour statistics by this newspaper suggests that this might not be the case. Most Indian workers do not enjoy the luxury of an eight-hour workday and weekends in any case. Younger workers, especially the educated ones, are willing to take jobs with hardship to escape high unemployment rates. Sure, a small group of privileged young workers might prefer leisure to hard work, but they cannot be taken to be representative of the Indian economy as a whole. Taking this analysis further shows that the problem might be at the end of firms rather than workers. More than three-fourths of India’s non-agricultural workforce works in firms which have less than 20 workers. These are very unlikely to be enclaves of innovation or value creation. When read together, the numbers suggest that most of the Indian economy is caught in a low-level equilibrium trap where poorly paid workers are doing drudgery in the name of work in small firms.

What India really needs is a dynamic micro, small and medium enterprises (MSME) sector which allows it to leverage its comparative advantage in cheap labour and become a leader in manufacture and export of labour-intensive commodities. What India needs are innovation hotspots that can redefine industries, much like the public and private sector have done in fintech. And what India needs are large companies that can compete globally. Solving this challenge requires work on ease of doing business and offering the correct policy incentives – both areas that the government has been focusing on. We need more of those – and less sermonising about the need, like Boxer in Animal Farm, to work harder.