No nation in economic transition has workers achieving work-life balance. The kerfuffles over working Sundays or 90-hour weeks are but outpourings of an elite minority.
- National outrage about business leaders — most notably Infosys founder Narayana Murthy and L&T CEO SN Subrahmanyan — exhorting Indians to put in long working hours.
- Widespread concerns over gig labor especially their work conditions and compensation.
- RBI maintaining tight monetary policy and hardening norms on personal credit in the face of economic slowdown.
Three seemingly disparate trends, independently unexceptionable at first principles level, yet intertwined by a basic dichotomy — sensibilities of India’s status as a low middle-income country struggling to grow at a pace most Asian peers did several decades ago.
Work-life balance, high levels of worker rights and high macroeconomic stability are all desirable outcomes — but nearly all societies and nations fell far short of these standards during economic transitions. While recent experience of fast economic change is largely in Asia, the same exceptions have been the rule even in the West during the Industrial Revolution of the 18th and 19th centuries.
Long work hours have long been an Asian norm. China has the 996 Working Hour System — employees work from 9 am to 9 pm, 6 days a week — 72 hours a week. In Japan, a 2016 govt survey showed nearly a quarter of companies required employees to put in more than 80 hours of overtime a month, and the average Japanese worker didn’t avail 10 of of paid vacation days. It’s a trend normal across East Asia, especially after WW2 when the region embarked on its spectacular growth trajectory. Results have been phenomenal — in about four decades, the region became the world’s largest economic engine after US, with several countries graduating to ‘rich’ status – per capita income higher than $13,000 — and others close to that level.
Similarly, labor wage repression owes it origins to Europe’s Industrial Revolution. Smokestacks across great European cities were operated by workers appalling conditions who were paid a small part of the enormous economic value added by the enterprise.
“Any capitalist who had made sixty thousand pounds out of sixpence, always professed to wonder why the sixty thousand nearest hands didn’t each make sixty thousand out of sixpence.” This was despite Europe’s access to capital seized from its colonies. Circumstances remained dour even a century on, as the Industrial Revolution made its way to the other side of the Atlantic.
Cut to the 20th century, and the trend remained same in substance, this time in Asia. Through the 1960s, 1970s, and 1980s, real wages in East Asia barely went up, even as economies grew at ‘tiger’ rates — state policy and sometimes direct intervention kept labor wages low.
The trend reversed only in the 21st century, when most countries had reached substantial levels of prosperity. India’s financial services architecture reveals a similar reach for first-world levels. Monetary policy framework around inflation targeting, curbs on fiscal excesses via FRBM, ultra-conversation banking regulation — regulatory approach aims for macro-stability and risk-aversion, with growth sought to be enabled as an outcome of the former rather than an independent objective by itself.
Regulatory conservatism has percolated deep into private corporate behavior. India Inc is generally conspicuous in its frugal approach towards capital, focus on Return on Capital Employed (ROCE) and risk-optimization. In contrast, post-WW2, East Asia saw a high investment model of growth, invariably getting into boom-bust cycles and generally inferior to India ROCE profiles.
Final outcomes? While macro growth at low base years ( per capita incomes) was very high, returns from markets for financial investors were decidedly poor. China is a great case in point, its stock market made very little for investors even as its economy showed the most breathtaking long-term growth ever seen.
In short, India’s caught between an instinct to preserve work-life balance, extensive labor protection, and, risk-free approach to preserving macro-stability. All of these in some way hold back a drive towards maximizing growth.. In a democracy, popular demands drive certain policy choice. Expansive welfare programs, for instance, are clearly electorally seductive. None of the three trends noted here are matters of mass conversation.
On the contrary, they represent elite sensibility that’s sometimes reflected in policymaking. Choices made as a society and polity aren’t necessarily via contests of political corrections. “Everything about India and its opposite are true” is an enduring cliche. In some says, the politically correct Opposite is a binding constraint on the Everything of pulling Indians up the ladder quicker.