Making Sense Of The Employment Challenge

Context:

• This article is based on an Editorial “Making Sense of the Employment Challenge” which was published in the Hindu. Recently, N.R. Narayana Murthy, the founder of Infosys proposed a 70-hour work week and to strengthen his proposal he has pointed to the experience of Japan and Germany after the Second World War, when citizens worked longer hours and achieved a miraculous rise in the 1950s. 

Determination of Output 

• Depend on Aggregate Demand: Ever since the Keynesian Revolution in economics, the output is determined by aggregate demand.
  • It is the demand for the total volume of goods and services produced in an economy. 
• Demand for Labor: It is entirely dependent upon this aggregate demand. There is no demand for labor independent of the demand for goods. 
  • Workers who work longer hours will not ensure that they will find employment so long as firms are unwilling to hire (depending upon the demand for their products).
  • Lay-Offs in the ‘Tech’ Sector: Recent such examples of layoffs from Google, Amazon, etc., shows that the variation in demands directly affects the employment scenario. 

The Case of Japan and Germany:

• High Demand for Labor: During the Second World War, they had experienced a decline in their workforces due to greater mortality, both from combat and the bombing. So, to rebuild the economies, the demand for labor was abnormally high. 
• Financial Heft: In West Germany, there was the Marshall Plan by which the United States had assisted the country’s revival.

The Case of South Korea:

• Another Example: It is another economy that saw long working hours. 
• Financial Heft: It too was recovering from a war, and its resurgence was supported by considerable foreign aid received from the U.S. 
• Additional Dimension: A dictatorship that saw the commandeering of able-bodied men to work in the countryside on large-scale projects for raising agricultural productivity. 

Is it appropriate to compare the high working hours of Japan, Germany, and South Korea with India?

• Different Perspectives: The case of high working hours in the mentioned countries is backed by funding and coercion and is not an experience helpful to understanding the present in India.
• Difference in Rising Demands: In the economic rise of the three countries mentioned, it was post-war reconstruction that provided the demand for greater output in the first instance. 
  • India is a market economy where firms are driven by consideration of profit and coercion is ruled out. 

Economic Strategies for India:

• Boost in Domestic Economy: Use the global market or world demand to grow the domestic economy, but India’s goods would have to be globally competitive. 
  • A country’s competitiveness is ultimately determined by the productivity of its workforce and the physical infrastructure that complements labor. 
• Expansion of the Domestic Market: It is necessary to attain expansion in the aggregate demand. 
• Need of Lowering of Food Cost: If food can be produced at a lower cost, it would increase the real income of the majority of Indian households and they would spend more on non-agricultural goods and services. 
  • This would generate demand, hence, output will grow, and in turn the employment.
    • The food and non-agricultural goods and services are placed differently in relation to consumption needs.

Also Read: Ethical Perspective On Working 70 Hours In A Week

Conclusion:

Ethnographic studies of India’s informal sector show that in some of its segments, unorganized workers are already laboring for very long at very low wages and without any such protection. Now, the time has come to ensure acceptable working conditions, ensure higher wages, health and skill, and more equipment to lessen the physical burden of laboring.