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21st November 2023 (9 Topics)

Making sense of the employment challenge

Context -

Infosys founder N.R. Narayana Murthy challenges Indians to adopt a 70-hour work week, drawing parallels with post-World War II Japan and Germany where citizens worked longer hours for enhanced national output.

Output Determined by Aggregate Demand

  • Output and Labor Dynamics: Output relies on aggregate demand (AD); labor demand is contingent on AD changes, crucial for employment assurance.
  • Tech Sector Layoffs: Recent tech sector layoffs underscore how demand variations directly affect employment dynamics.
  • Goods and Services Demand: The labor market's vitality is intricately linked to demand for goods and services, influencing employment patterns.

Case of South Korea and Economic Strategies

  • Historical Context of Working Hours: Historical cases like South Korea, driven by coercion and public funding, may not be directly applicable to India's market economy.
  • Global Market and Competitiveness: Leveraging global markets requires globally competitive goods, emphasizing the importance of workforce productivity and infrastructure.
  • Domestic Market Expansion: Growing the domestic market involves increasing agricultural productivity to boost real incomes, stimulating demand for non-agricultural goods and fostering overall economic growth.

Challenges and Policy Considerations

  • Formal Sector and 70-Hour Workweek: The 70-hour workweek proposal targets the formal sector, demanding legal safeguards to ensure fair working conditions.
  • Informal Sector Challenges: India's informal sector already experiences long hours; legal intervention is essential for better conditions, higher wages, and improved labor rights.
  • Productivity and Domestic Demand: Prioritizing productivity and expanding the domestic market are key strategies for sustainable economic growth and increased employment opportunities.
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