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Memo to CITU: a 35-hour work week won't cut it for a growing India, and will only hurt workers
At a time when labour lobbies around the world demand that workers be skilled to keep up with economic shifts, CITU wants a more relaxed week. The CPM's trade union wing will campaign for a 35-hour working week, down from the current 48, claiming this will create more jobs. But given that Indian workers are among the least productive in the world, lower work hours could compel greater use of capital to maintain output levels. A Boston Consulting Group report says labour productivity in India is $3,000 per employee a year, against $1,55,000 in the US and $1,04,000 in Japan. This proposed change will only complicate matters further. Employees are rarely prepared to have their wages reduced along with reduced work hours. Labour unions have no business capping hours and incomes for workers who want to put in the effort to earn more. If they argue that the 35-hour condition is not binding on existing workers, then it is unlikely to create new jobs. The experience of other countries that have reduced work hours shows that it is existing employees who pick up the slack and get paid overtime, rather than new workers. This is guaranteed to be the situation in India, where employers are reluctant to hire because labour law makes it near-impossible for them to fire.
CITU's demand is entirely wrong-headed for a country like India, where the problem is not a lack of jobs, but the distortions in the labour market. India has one of the most rigid labour legislations, but only a sliver of the workforce is actually protected. It clearly needs a middle way, creating greater social security for informal workers (roughly 95 per cent of the workforce), while moving existing organised labour to a more efficient regime. Right now, the lack of flexibility for employers is the primary reason for low organised manufacturing. It forces firms to rely heavily on capital, resort to informal arrangements and limit their scale. In such a context, the demand to reduce the work week for organised labour is truly absurd.