Wednesday, September 23, 2009

Leisure & Productivity

As a country develops the labour productivity tends to increase. This would imply that a country endowed with better capital would be able churn out more goods per hour(or any unit of time) than a country with lesser capital investment. We can clearly the veracity of this hypothesis in our everyday life. The output produced by an average Bangladeshi worker per hour is much lower than the output produced by a German labour. This has nothing to do with the fact the Bangladesi are lazy or Germans are industrious. It only reflects the fact that an average German is better educated and equipped with technology to increase his hourly output.

Labour productivity is not an obscure measure. It can easily be estimated by dividing the GDP of a country by the total labour-hours available. For e.g in US 2008 GDP was 14,350 billion dollars(Source: Federal Reserve). And available total labour hours is 797 million hours. (Source: US BLS )So the average productivity comes around 18 dollars an hour per US worker. So statistically every US worker in 2009 churned out goods worth 18 dollars a work hour.( in current dollars without factoring inflation).

But as productivity rises the demand for lesiure also increases. After all work and no play makes Jack a dull boy right? So the developed country are witnessing the phenomena of high labour cost (it costs a lot more to employ Americans remember) and lesser work hours as well!!

Increasing there are calls for making Friday a part of extended weekend. In my college here in America, people increasing bid me Weekend wishes starting from Thursday afternoons !! In such a scenario we would effectively define a work-week as having only a four continuous working days of eight hours each (considering the fact that in the nineteenth century Industrial age workers toiled for more then twelve hours a day, all week long, this is indeed a remarkable turnaround !!). Increasingly leisure hours would only serve to undermine the competitiveness of an economy.

P.S: India has a long way to go in reaching labour productivity anywhere near OECD countries. In this age of increasing mechanization we still tend to cling on hard manual labour. Our NREGS(National Rural Employment Guarantee Scheme, similar to the depresssion era WPA in US) is one prime example of this atavistic mentality. Instead of training rural folks to equip them with marketable labour skills, we employ them in manual labur. The worst part the output of their is hardly ever produces tangible assets. Perhaps our public policy doctrine tend to prefer the status quo.

No comments: