By Vivek Joshi | PGPX 2007
The window of demographic dividend of India is closing faster than expected, and the nation is still a long way away from becoming a developed country. With the background of the recent controversies over the number of hours of work per week, the productivity imperative for India is examined. The nation will need to devise its own balance between working hours and productivity, and not rely on imitating systems elsewhere.
Recent comments by some senior business leaders on the need to work 70 or 90 long hours have made headlines and created digital storms on social media. There have also been serious discussions on the impacts. Rest & recuperation for labourers are important. The consternation appears to be much more in the category of white-collar workers, who generally have a work week of 40 hours/week. However, when doing copy-paste from Western practices, it is useful to be mindful of the contexts and histories of how the developed Western world attained its current status, and the status of developing country peers.
Underlying Economics: Prosperity of a nation and welfare of its people are seen from the income per capita, often seen as the average GDP/capita as a proxy. This is about $7766 per annum for India in 2022, compared to $58487 (both Geary-Khermis dollars, 2011) for the USA in the Angus Matheson database, which enables comparison across countries over large periods of time. The G-K dollars are a proxy for PPP (Purchasing Power Parity). At Market Exchange Rates (MER), the per capita income in India would be only about $2800/person/year compared to about $84000/person/year in the USA. For prosperity and GDP/capita to increase to the levels of a developed country, the numerator (GDP or total output) has to increase, and the denominator (population) must increase at a slower rate, or remain constant, or decrease, as in the case of Japan. Key enablers of the increase in GDP include the working age population, the productivity (output/worker) of the working age population, and the dependency ratio (DR), which is the size of the population divided by the working age population. A recent study by McKinsey says that the ratio of working people to the number of old people in India will decrease from 10 in 2023 to 4.6 in 2050. Demographics added 0.7%/year (out of 4.8%/year), which will decrease to only 0.2%/year by 2050. Mathematically, the GDP/year can be broken up into several Critical Success Factors (CSFs) expressed as important ratios, which can be examined as levers.
GDP/Year(Output)= (Total Population) x (working age population/TotalPopulation) x (Labour Force/Working Age Population or LFPR) x (1 – Unemployment) x (Output in Rs/hour worked per labour) x (number of hours worked/Working week) x (working weeks /year).
The first four terms relate to the number of labourers in the economy. The last three terms related to their output. The total population & working age population are a part of demography, which is a very powerful but very slow to change force. LFPR (Labour Force Participation Rate) is the proportion of those working or actively seeking work in the total labour force available. This ratio is manageable, but the change is slow. Of those seeking work, a fraction will get employment and start producing, which is covered in the term for (1- unemployment %), the USA U-3 definition. In an ideal scenario, the number working towards growing the economy will equal the total number in the working age, i.e., LFPR will be 100%, and Unemployment will be 0%.
Output per hour worked, or hourly (or daily/annual) productivity, depends on several factors. These include but are not limited to: a) Technology, b) Systems in the workplace, c) Systems at the macro-level, d) Competencies & Skills levels of labour, e) Health & welfare of labour, f) Job levels, and of course g) Capital & its productivity. Some of these are not under the direct control of labour. Some of the factors can have undesirable side effects. For example, the use of a high level of technology can have a severe societal effect of decreasing the employment levels in the short or even medium term. Macro-level systems depend on several macro-level factors, including politics & trade unionism, with their own effects. Some factors, like large-scale skill development or improving the health & welfare of the population, need extensive resources or long time periods in large countries. The number of weeks worked per year depends on the vacation period, holidays, and weekends that labourers work. In contrast, the number of hours worked per week is more directly in the control of labour itself.
Avoid Copy-Paste from the West: It is quite common that systems, practices & processes in the developed countries in the West are taken as a given to be adopted in India. Without debating the merits of any such system here, we examine the evolution of the work week in the USA, with its growth as a developed country, in the following table:
| Country (G-K $,2011) | Year | Avghours of work per week | Avg Annual per capita income(G-K$) | LFPR (Total) / (LFPR Women) | Unemployment |
| USA | 1850 | 69 | 3632 | 56% (21%) | 3% |
| 1900 | 60 | 8038 | 57% (21%) | 5.0% | |
| 1925 | 51 | 11150 | 55% (24%) | 5.9% | |
| 1950 | 40 | 15240 | 58.9% (34%) | 4.5% | |
| 2022 | 40 | 58487 | 63% (57%) | 3.8% |
Note that by the year 1890, the USA had reached the goal of becoming a developed country; the period before the 1890s can be considered as the period where the country was striving to become developed. To that extent, the pre-1890 period of the USA reflects the situation in which India is currently. The USA’s per capita annual income in 1900 was $4091 MER, which is about 130% more than the income in India even in 2024. The same analysis can be done for Germany, which in the year 1900 had developed to the same per capita income as India has in 2024, with average working hours of 65-70 per week. Japan perhaps presents an extreme in this. China, Indonesia & Vietnam have actual working hours, including overtime, ranging from 52 to 72 hours per week. In the mid-1800s, in addition to the work per week, the working conditions in the USA were such that moving to an urban area for industrial work was considered a definite shortening of life span. Working conditions in most workplaces in India, and particularly for organized labour, are much better.
Productivity Imperative for India: The population of India is expected to grow to about 1.69 billion by 2055. India is currently enjoying a demographic dividend. The Fertility Rate (TFR) of India has been decreasing sharply, and it is expected that the window of demographic opportunity will close faster than expected, by about 2055. India thus has a narrowing window to lift the prosperity levels or GDP/person of the population. Currently, the GDP of India is about $3.9 trillion. The working age population is 0.91 billion. LFPR(Total) is about 60%, with Female LFPR at 37% (rural-42%, urban-25%). As per the PLFS (Periodic Labour Force Survey), unemployment is about 3.2%. Privilege leave (4 weeks), casual Leave (2 weeks), Sick Leave (2 weeks), Declared Holidays (2 weeks), and reduce the weeks of work per year to about 40-42.
We consider the upper limit of the Viksit Bharat 2047 goal, which envisages that by 2047, India will have a GDP of $38 trillion ($30 tln is used in most government plans). The working-age population is about 1.1 billion. LFPR will grow to about 75%, with Female LFPR at 45%. It is difficult to envisage that unemployment will drop to below the 3.2% estimated by PLFS. Given that India is a complex country, we assume that the number of holidays will remain the same and work weeks will continue to be 40-42 per year. Inserting these numbers in the equation given earlier and dividing the equation for 2047 by the equation for 2024, we narrow down the productivity part to two ratios in a productivity equation, i.e.,
(# hours/week by 2047) =6.4 x (output/hour in2024) / (output/hour in2047) x (# hours/week in 2024)
To arrive at the number of hours of work per week needed from now until 2047 for a developed India, we further examine the ratio on the right-hand side of the equation, (Output/hour worked in 2024) divided by (Output/hour in 2047). For this, an estimate of the labour productivity growth from 2024 to 2047 is needed. The USA labour productivity growth in the period 1990-2000 reached 4%/year. However, the USA was a well-developed country by then already, and this growth can be expected to be higher for a developing country starting from a (very) low base. China achieved labour productivity growth as high as 8.9%/year from 1995-2010, and about 7% over a sustained 30-year period. India has managed a labour productivity growth rate of about 6%/year for short, sustained periods. With digitalization and the current very low productivity, and recognizing the differences between the democratic Indian system and the autocratic Chinese system, an optimistic labour productivity growth rate of 7%/year is taken. At this CAGR (Compound Annual Growth Rate) of over 23 years of labour productivity, the ratio of Output/hour in 2047 divided by Output/hour in 2024 becomes (Output/hour in 2047) / (Output/hour in 2024) = 4.7. Inserting this value in the equation, we get (#of hours work per week by 2047) = 6.4/4.7 x (#of hours work per week in 2024). The average number of hours worked per week in India is 47 to 55 hours. Hence, the number of work hours per week required by 2047 becomes 1.36*50, which is 68 hours per week. These would be actual hours of production and exclude commuting and lunch break times. Countries in their journey to developed status have sustained this pace over long periods, and a lower number of hours of work per week has come into practise after becoming developed countries.
Path Forward: With the demographic window closing faster than expected, and the importance of becoming a developed country rapidly to provide a much better quality of life for its people, India will need to find levers and create solutions. Demography in numbers will change very slowly and is not a usable lever. Quality of the demographics (like health & education) can be changed faster and hence becomes an imperative. Increasing Female LFPR from 45% to 70% will increase overall LFPR by another 10%, and decrease the number of productive work hours per week required to about 60 hours. However, this change will require societal acceptance and could result in a decrease in male employment depending on the total number of jobs available. Another lever is to increase the number of weeks of work per year. Some data suggests that, against the 40 weeks per year taken in calculations here, Indians work about 36 weeks per year. If work weeks per year increase from 36 to 40 per year, the number of hours/week can be reduced by about 10%. This increase in weeks of work per year is unlikely, given the politics and complexity around it.
The most important lever is output(Rs)/hour worked. If the CAGR of productivity growth can be increased from 7%, taken in the calculations above, to 8.5%, the number of work hours per week can even be reduced from the current status by 2% to about 49. Conversely, if the CAGR of labour productivity is decreased in this estimation from 7% to 5.5%, then the hours worked per week required increase to about 82 hours, excluding commuting and lunch hours. Increasing the Output/hours becomes the most important productivity imperative for India. For this CSF, the key drivers will be Technology, Education/Skills/Health of labour. Use of Technology can result in higher unemployment levels in the short-medium term; however, the level of unemployment is not as strong a CSF as Output/Hour in managing the hours of work per week. High value addition activities are also likely to be more capital-intensive. Note that GDP is value added, and not merely an increase in revenue. Therefore, along with the increase in value of output, higher efficiency and cost control will also be important. The path forward will be very challenging. An encouraging aspect is that there has been a significant increase in TFP (Total Factor Productivity) in India in recent years (https://sundayguardianlive.com/opinion/total-factor-productivity-trends-china-india-2).
In conclusion, from amongst all imperatives, including labour-intensive growth, keeping in mind broader societal implications, India needs to focus on moving up the value chain in terms of value produced per hour of output. The nation needs to release more of its workforce trapped in low-value yielding agriculture and into manufacturing, and progress more into high-value addition Industrials & Services. The $38 trillion GDP goal means that at about $24000 per capita, even by 2047, Indians will have less than 1/3rd of the per capita GDP of the USA in 2024. Several generations made sacrifices for independence, and it appears that several more will need to sacrifice some of their leisure time to make India a developed Nation.
Author Bio:
Vivek Joshi is an Advisor at A-Joshi Strategy Consultants Pvt Ltd, Mumbai. He is an alumnus of PGPX 2006-07. He has more than 30 years of international multifunctional experience, and is the author of several publications and two books. His 2nd book, Start-Up to Scale-Up Entrepreneur’s Guide to Scaling-Up, was published in 2026. A version of this article was published in The Sunday Guardian.
