Indian Industry Needs Innovation, Not Mindless toil

Prominent corporate leaders in India have advocated for longer working hours.

Introduction

• The corporate push for longer working hours inadvertently reveals a significant truth: India’s industry continues to rely on cheap labor rather than technology or innovation for its competitive edge.
• In the developed world, the surplus extraction model evolved, focusing on higher efficiency through advanced technologies and management. 
• In contrast, India continues to operate with outdated methods, relying on low wages and long working hours to drive profits.

Case Study

• Survey Conducted: Migrant industrial workers in Ludhiana, Punjab, were interviewed. These workers, involved in garment production, auto component manufacturing, and other products, work 11 to 12 hours a day. 
• No Time For Rest: During peak times, they often work continuously for days, with little time for rest. Outside of their work, most of their waking hours are consumed by cooking and commuting.

Case of Developed Countries

• Case of Britain: While working conditions in Britain improved during the 19th century due to labor union pressures and technological advancements, workers in rich countries today work fewer hours with higher productivity.
• Working Hours: The International Labour Organization (ILO) reported in 2024 that the average weekly work hours were 38 hours in the United States and 36.6 hours in Japan, compared to 46.7 hours in India.

Case of India

• Data From PLFS: According to the 2023-24 Periodic Labour Force Survey, only 21.7% of India’s workers have regular salaried jobs. The remaining workers are either casual laborers or self-employed.
• Organised Yet Unprotected: Even within regular jobs, half of the workers face informal working conditions, such as no written job contracts or social security benefits.
• Dominant Feature of Indian Manufacturing: In industrial clusters like Coimbatore and Ludhiana, small units with fewer than 10 workers predominate. In these areas, hundreds of machines hum away in small sheds, producing parts for larger firms. 
  • More than 70% of India’s manufacturing workforce (68 million in 2021-22) is employed in small, unregistered enterprises.
• Struggles of Small Firms: The relationship between small and large firms in India has not been mutually beneficial. Small-firm owners often report delayed payments from larger companies, which exacerbates their financial difficulties. 
  • Despite rising production costs, large firms refuse to pay more for parts, forcing smaller firms to compete on price alone.
  • This, combined with inadequate state support, weakens small firms and makes them vulnerable to competition from cheaper imports.
• Rise of Contract Workers: India’s factories increasingly rely on contract workers, who make up 56% of the workforce in the factory sector post-2011-12.
  • These contract workers, not protected by labor regulations, earn lower wages compared to directly employed workers.
• Case Study of Garment Industry: India’s garment industry, which has failed to gain market share despite the country’s labor surplus. 
  • India’s Shares Remain Stagnant: India’s share of the global garment export market has remained stagnant at 3.1% over the last two decades, while countries like China, Bangladesh, and Vietnam have outperformed India.
• High Profit and Low Export: In India’s factory sector, profit as a share of value added increased from 31.6% in 2019-20 to 46.4% in 2021-22. Yet the export remains low.
• Technological Stagnation: The easy availability of cheap labor has led Indian industry to neglect technological and managerial advancements. This has slowed growth, even in emerging sectors like IT. 
  • Low wages and long working hours have reduced the purchasing power of the working class, further depressing the domestic market and hindering growth.
• Unsustainable Cycle: Stretching the working day and denying workers adequate rest in the pursuit of profit is unsustainable. 
  • Short-Terms Gains vs Long Term Gains: While companies may see short-term gains, the growing number of impoverished workers will eventually stifle industry growth and innovation. 

Conclusion

India’s over-reliance on cheap labor has stunted its long-term growth, especially in industries that require innovation and modernization. There is a need to recognize the need for modernization, fair labor practices, and innovation, the better it will be for both the workforce and the industry as a whole.