Sunday, December 9, 2007

Productive disengagement

For India, productive engagement still remains a chimera!

The third issue of the Labour and Social trends 2007, by the International Labour Organisation reveals some interesting aspects. Though the issue primarily focuses on the major trends in employment and the socio-economic condition of the labour force in the ASEAN (Association of South-East Asian Nations) region, one of the interesting areas that it highlights is the contrasting labour productivity for the same region.

It is a well known fact that Asian economies like India, China and partly Indonesia, are not only over-populated but also pose the complexity of diversity. With average or below average socio-economic performance, the challenge with these economies is not just about generating productive engagements for millions of people but to enhance their productivity. As it is labour productivity which finally translates into individual prosperity and goes on to build the competitiveness of the nation. The report interestingly points out that in 2005 the labour productivity of the ASEAN region averaged around USD 9019 (with Singapore clocking the highest with USD 47,975 and Cambodia with lowest USD 2845), whereas Japan’s labour productivity stood at USD 44,361, South Korea at USD 36,729 and China and India at USD 9486 and USD 6587, respectively (all the figures are at constant 1990 USD). Stand alone, these figures don’t make much sense, except for the fact that it indicates that countries like Japan, Singapore, and South Korea are far more competitive than India and China. But the same figures reveal more interesting facts, once they are tracked over a period of time. The study highlights that over the past decade i.e. 1995 to 2005, the output per worker in the ASEAN region has grown by 17.1%, whereas in Japan it grew by 14.1%, which was less than the ASEAN average. In South Korea, China and India, it grew by 38%, 90.2% and 54.5% respectively. China almost doubled its labour productivity in these ten years. What is even more interesting is that between 2000 and 2005, the growth in output per labour shrunk in the entire region (including India and China), but the decline had been least in the case of China. And that is the reason China had been surging ahead not only in terms of its competitiveness but also in its pursuit of socio-economic development.

In fact it is amazing that being an agrarian economy, the average productivity per unit of labour in India stands at USD 583, whereas that of Malaysia is at USD 6095! And for that of services our output per labour is at USD 3196 and that of Malaysia is at USD 8487! It would have been still fine if we were to assume that our average productivity is low on account of less efficiency as then the consolation would have been that people are productively engaged even if there is a long way to go in terms of their efficiency. But then with 60% of our workforce being self-employed, 30% casually employed and almost 90% remaining employed in the unorganised sector (bereft of any social benefits), the unfortunate truth is that in this era of productive efficiencies and global competitiveness, we as a nation have rather been productive in disengaging the work force.


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