The Hindu Business Line : Rethinking productivity for better lifestyles

In a large developing country such as India, one needs to rethink the kind of productivity that can truly provide everyone with a decent life. India's hi-tech centres are full of people with low-tech or no skills at all who make available their labour in myriad ways while elite engineers write software and design computer chips, says Kumar Venkat.

ON MY last visit to India, I walked into a men's room at the Bangalore airport and was greeted by an attendant whose job was to dispense liquid soap and paper towels. The work was, of course, superfluous, but he clearly needed the job and the tips he occasionally received. Perhaps, his labour could have been put to a more productive use elsewhere.

But the vast ocean of humanity in a large developing country such as India is a stark reminder that perhaps one needs to rethink on the kind of productivity that can truly provide a decent life to everyone.

India's hi-tech centres are full of people with low-tech or no skills at all, who provide their labour in myriad ways while elite engineers write software and design computer chips. Labour is not a scarce commodity in many developing regions of the world.

In contrast, labour productivity is central to any discussion of the US economy. High labour productivity has been cited as one of the reasons for the slow job growth in the current economic recovery.

Still, many economists believe that productivity growth, which allows goods and services to be produced at decreasing cost, is the ultimate source of wealth for everyone.

In competitive markets, lower production costs mean lower consumer prices, which stimulate demand and lead to further increases in productivity and, ultimately, wages. But this conventional argument ignores the crucial role of natural resources in production and consumption.

Labour remains expensive relative to natural resources such as energy and raw materials in industrialised countries.

In response, new technologies are designed to reduce and eliminate human labour, making the remaining workers more and more productive.

The manufacturing sector continues to lose jobs to automation and the use of cheaper labour overseas. Now, much of our routine business is transacted with the likes of banks, bookstores, and airlines without ever seeing a human face or hearing a live voice.

Is the factor of production — labour — being over-optimised at the expense of other resources that are truly scarce?

One way to answer this is to look at the biologically productive land and water area required to support our resource consumption and waste output.

Redefining progress, a non-profit organisation that develops tools and policies for sustainability, estimates that it takes 9.57 hectares to support an average American. This ecological footprint is about 80 per cent higher than locally available regenerative and absorptive capacity.

The deficit is made up through imports and disproportionate use of global resources such as the atmosphere. The per capita footprint is 1.36 hectares in China (36 per cent above capacity) and 0.76 hectares in India (nine per cent above capacity).

Humanity's total ecological footprint is nearly 16 per cent higher than earth's capacity, indicating an unsustainable depletion of natural capital.

The US has the largest per capita ecological footprint among all nations and consumes more than 20 per cent of the world's resources.

Developing countries aspire to similar living standards but face the enormous task of lifting hundreds of millions out of poverty. Their plan for economic growth depends on using large amounts of additional natural resources.

China, for example, has become an insatiable consumer of energy and raw materials, with its energy consumption expected to more than double by 2030.

At the time of such unprecedented resource use, nearly 750 million people around the world are either unemployed or classified as "working poor", according to the International Labour Organisation. More than 500 million additional workers will enter the world's labour markets by 2015.

A number of resource economists and sustainability thinkers have advocated an environmental tax shift in developed nations, which would reduce the tax burden on labour and increase it on fossil fuels, virgin raw materials, waste generation, and pollution.

The idea is to encourage more employment of labour and less of scarce natural resources. Tax shifting is finding much more traction in Europe than in the US.

In developing nations, where labour costs are low and raw materials relatively expensive, resource-saving and employment-generating activities such as repair and remanufacturing are already widespread.

But technologies and lifestyles borrowed from rich countries, including private automobiles and disposable products, could destroy any possibility of sustainable development in these countries.

What they lack — and perhaps need the most — are policies and technologies designed to radically increase resource productivity and employment opportunities in tandem.

It is difficult to imagine a liveable future where unemployment and underemployment are rampant and the use of natural resources remains unrestrained.

Both developed and developing nations face the same ultimate challenge: Moving from a narrow view of productivity to a balanced consideration of how best to employ both human and natural resources.

(The author is a technologist, entrepreneur and writer based in Silicon Valley. He can be reached at kvenkatmy-fb@yahoo.com)