India Must Compete: Prescription # 8- Increase Productivity
Posted : April 28, 2005 at 7:32 pm [IST]
Prescription # 8
Increase productivity of every person in every assigned activity, A farmer, a worker, a teacher, a plumber, a scientist, an engineer, a designer- all working population must realize that it is the productivity that makes one nation better, and richer than the other.
Economic progress of a country comes from increasing productivity of its working population and GDP per capita growth becomes the measure of economic well-being. GDP growth rate is also the measure of a country’s progress and place on the path that takes it from ‘underdeveloped’ to ‘developing’ and then to ‘developed’ category. GDP per capita is simply labor productivity (how many goods and services a given number of workers can produce) multiplied by the proportion of the population that works. Productivity index of a country explains virtually all of the differences in GDP per capita of different countries.
A country’s productivity is the average of productivity in each industry, weighted by its size. India must compare the productivity of its industries with the productivity of the same industries of other developing and developed countries and do every thing to improve it to the best-achieved standard. India missed its competitiveness in manufacturing sector, as the sector didn’t care about its productivity. High productivity in the unglamorous “old-economy” sectors-retailing, wholesaling, construction-is most important, since more people work in them. India is to go fast on that to meet the globally best standard of productivity. Even the huge infrastructure and budget of National Productivity Council and its local units could not pursue with the productivity improvement to global level.
When I started my career in an automobile company, the productivity improved in 60s. The production lines that were producing 10 sets of car components and subassemblies went above 150 too sometimes. But then, the gradually increasing interference of labor union killed all the initiatives. Even today, union machinery and their high commands hardly appreciate the need of attaining competitiveness in productivity as an essential reason of our falling behind in manufacturing sector. The productivity, quality, continuous improvement, innovation and many other measures of competitiveness become the causalities of the union impertinence. Many a times rather in majority of the cases, the management and managers are equally responsible and fail to provide the leadership and encourage initiatives to improve the productivity too. In one of article-‘Power of Productivity’ by Bill Lewis (available now in book form) in ‘McKinsey Quarterly’ published some facts. The graphs of McKinsey are clear indications of India’s dismal position in productivity game.
About 20 percent of India’s people work in companies that are structured somewhat like those in the developed world, but their average labor productivity is only 15 percent of what their US counterparts achieve. These companies could increase their productivity to about 40 percent of the US average without any additional capital investment, just by reorganizing the way they conduct work.
In 1983, the Japanese auto company Suzuki Motor invested in a joint venture- Maruti Udyog, to make cars in India. Suzuki built plants like the ones in Japan, organized the work as it is organized in Japan, and trained employees to work as they do in Japan. As a result, the productivity of these facilities is 55 percent of the US auto industry average.
Today, Maruti compares reasonably with Suzuki’s Japanese plants. Many enterprises in India have attained the competitive productivity level. However, the majority is lagging. It is not the labor cost or technologies that are making Chinese manufacturers excel. Information from all sources confirms the dedication, sincerity, and hardworking of the Chinese workers. I am afraid if we don’t change our work culture even in IT industry we may get behind.
India must accept the challenge in manufacturing sector too, as a country as big as India can’t live with only service sector. But all the enterprises in India must improve their productivity to the world-class level. India’s position in IT is a proof of India’s capability.
Firstly, every person must work productively for the assigned number of hours. Then the working atmosphere must motivate the person to find ways and means of improving his productivity and to incorporate the productivity improvements coming from everywhere. Benchmarks and standards may come from industrial engineering practices or available data from similar jobs in better companies or from industries in developed countries.
Increase productivity, increase efficiency, reduce waste, and increase competitiveness.
- Indra
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