Economy
Now, Economic Survey wades into India's working hours debate
Summary
- India’s working hour limits may increase the cost, time, and risk of manufacturing
The Economic Survey 2024-25 argues that working hour regulations are preventing manufacturers from meeting demand surges and participating in global markets.
The observation comes at a time when India Inc. is not only getting its employees back to the office, but also asking them to put in additional work hours.
“...there are instances where labour regulations designed to protect workers' rights perhaps inadvertently hinder the growth of firms, especially small and medium enterprises, by restricting their ability to expand operations when needed compared to global peers. In doing so, it dampens employment generation as well", noted the Economic Survey released on Friday.
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The survey points to Section 51 of the Factories Act (1948), which states, “No adult worker shall be required or allowed to work in a factory for more than forty-eight hours in any week." The survey highlights that this clause limits the number of hours a worker can work in a day and a week.
In recent months, corporate doyens such as Infosys founder N.R. Narayana Murthy, and Larsen & Toubro (L&T) chairman S.N. Subrahmanyan vouched for 70 hours and 90 hours of work per week, respectively.
Clash of generations
Their comments highlighted the clash between the different generations in India Inc., where subjects such as work life balance and flexible hours are currently under huge debate.
The survey took a stance similar to the two leaders cited above. “India’s working hour regulations prevent manufacturers from meeting demand surges and participating in global markets," it noted.
In fact, it highlighted that to reduce time-to-market, manufacturers must be capable of temporarily scaling up production.
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The survey also noted that working hour restrictions meant to protect workers' health and prevent overwork may actually impact the earning potential of the employee.
“These laws inadvertently hinder workers' earning potential, ultimately affecting their financial wellbeing," stated the survey. Compared to global working hours, India may have space for an increase.
“Labour laws in other countries allow manufacturers to average working hour limits across weeks and sometimes months," it stated.
“The International Labour Organisation (ILO) also recommends allowing manufacturers the freedom to average working hour limits across 3 weeks. However, India’s working hour limits may increase the cost, time, and risk of manufacturing," the survey noted.
However, experts are not in agreement with higher working hours. Nirmala Menon, the founder of Interweave Consulting that works on diversity and gender parity in India Inc, highlighted that extended work hours are not sustainable.
“The workers in factories are working to full capacity and extended hours may not be sustainable. The profits will be short-term spikes and managers who will bring about the changes, will leave for another post. The deliverables will get impacted, if working hours are longer than what one can sustain," Menon said.
