12-Hour Workday Won’t Work

Source: The post is based on an article “12-Hour Workday Won’t Work” published in The Times of India on 18^th May 2023.

Syllabus: GS 3 – Indian Economy, Changes to Industrial Policy

News: The governments of Tamil Nadu and Karnataka have recently allowed 12-hour workdays. The rationale behind this Arguments is that it will ensure higher domestic growth and foreign investment, thereby creating jobs.

However, developed economies have taken other measures to achieve these.

What steps have been taken by developed economies?

Developed economies have increased their GDP and attracted investments by growing the size of their manufacturing sector.

Manufacturing plays a key role in an economy’s growth and development because compared to other sectors it displays greater economies of scale and has a larger number of forward and backward linkages.

Further, unlike construction and the majority of services, manufacturing output is tradable. This means that firms cannot survive if they cannot compete in the global economy. This forces them to be more productive.

What is the current situation of India in manufacturing?

The share of India’s workforce in manufacturing has been around 12% since the early 1980s.  As of December 2022, total manufacturing employment in India stood at just 12.7% of the workforce.

The vast majority of workers, with low levels of education, who left agriculture have ended up either in construction or small-scale services, leading to low-productivity work.

Whereas the transition from farm to factory in Europe and East Asia increased the share of employment in manufacturing to 25-30%, reaching a peak.

What are the concerns present for India in the manufacturing sector?

India’s industrial policy has not been as effective as other countries like China. However, India has taken measures to improve its industrial policy for the manufacturing sector by introducing the PLI scheme.

Further, India is unable to attract foreign investments in the manufacturing industries as well as to promote domestic firms because of complex regulatory structure and inadequate infrastructure.

Since India suffers from these issues, it prefers focusing on labour law amendments.

Will amending labour law help India?

Without changing regulatory structure and infrastructure issues, labour law changes would not be of great help.

Moreover, Indian factories prefer employing contract laborers. This makes a vast majority of workers stay away from the labor laws benefits.

Therefore, a more transparent and uniformly enforced regulatory environment is needed to help employers and enable job creation to help workers.

Moreover, the biggest reason employers in India are much more powerful than workers is that workers far outnumber jobs. Therefore, the government must ensure the safeguarding of basic workers’ rights.

Further, regulatory changes must be accompanied by substantial investments in local and grassroots infrastructure. Else, labour law changes will not be beneficial and effective.

What can be the way ahead?

Balancing the wellbeing and safety of workers while allowing employers the flexibility to deal with fluctuations in market conditions is imperative for a well-functioning capitalist economy.

Hence, if India wants both economic growth and decent jobs then this balance must be maintained.