Economic Survey 2024-25 recommends worker safety as good for business

Improving working conditions in Indian manufacturing (especially OSH) to improve Indian Labour Productivity (currently 130th) and MSME professionalism: needed for faster, better, more equitable growth. We are delighted and honoured that our Safe In India’s submission on worker 𝐎𝐒𝐇 (𝐎𝐜𝐜𝐮𝐩𝐚𝐭𝐢𝐨𝐧𝐚𝐥 𝐒𝐚𝐟𝐞𝐭𝐲 𝐚𝐧𝐝 𝐇𝐞𝐚𝐥𝐭𝐡) has been included in 𝐈𝐧𝐝𝐢𝐚'𝐬 𝐄𝐜𝐨𝐧𝐨𝐦𝐢𝐜 𝐒𝐮𝐫𝐯𝐞𝐲 2024-25 in the important chapter "𝐄𝐌𝐏𝐋𝐎𝐘𝐌𝐄𝐍𝐓 𝐀𝐍𝐃 𝐒𝐊𝐈𝐋𝐋 𝐃𝐄𝐕𝐄𝐋𝐎𝐏𝐌𝐄𝐍𝐓: 𝐄𝐗𝐈𝐒𝐓𝐄𝐍𝐓𝐈𝐀𝐋 𝐏𝐑𝐈𝐎𝐑𝐈𝐓𝐈𝐄𝐒" (p.387-389) |

Click here to check out the chapter in the Economic Survey 2024-25

1. Worker 𝐎𝐒𝐇 (𝐎𝐜𝐜𝐮𝐩𝐚𝐭𝐢𝐨𝐧𝐚𝐥 𝐒𝐚𝐟𝐞𝐭𝐲 𝐚𝐧𝐝 𝐇𝐞𝐚𝐥𝐭𝐡) 𝐜𝐨𝐯𝐞𝐫𝐞𝐝 𝐞𝐱𝐭𝐞𝐧𝐬𝐢𝐯𝐞𝐥𝐲 𝐟𝐨𝐫 𝐭𝐡𝐞 𝐟𝐢𝐫𝐬𝐭 𝐭𝐢𝐦𝐞. 

2. The opportunity of OSH driving 𝐈𝐧𝐝𝐢𝐚'𝐬 𝐋𝐚𝐛𝐨𝐮𝐫 𝐏𝐫𝐨𝐝𝐮𝐜𝐭𝐢𝐯𝐢𝐭𝐲 (130th) 𝐚𝐧𝐝 𝐛𝐮𝐬𝐢𝐧𝐞𝐬𝐬 𝐩𝐫𝐨𝐟𝐢𝐭𝐚𝐛𝐢𝐥𝐢𝐭𝐲 acknowledged. 

3. SII’s 𝐫𝐞𝐜𝐨𝐦𝐦𝐞𝐧𝐝𝐚𝐭𝐢𝐨𝐧 𝐨𝐟 𝐄𝐒𝐈𝐂 𝐝𝐚𝐭𝐚 𝐭𝐨 𝐛𝐞 𝐮𝐬𝐞𝐝 𝐭𝐨 𝐢𝐦𝐩𝐫𝐨𝐯𝐞 𝐰𝐨𝐫𝐤𝐢𝐧𝐠 𝐜𝐨𝐧𝐝𝐢𝐭𝐢𝐨𝐧𝐬 𝐢𝐬 𝐚𝐜𝐜𝐞𝐩𝐭𝐞𝐝. 

4. Similarly, opportunity for the 𝐋𝐚𝐛𝐨𝐮𝐫 𝐌𝐢𝐧𝐢𝐬𝐭𝐫𝐲 𝐭𝐨 𝐬𝐭𝐚𝐫𝐭 𝐚𝐧 𝐀𝐜𝐜𝐢𝐝𝐞𝐧𝐭 𝐑𝐞𝐩𝐨𝐫𝐭𝐢𝐧𝐠 𝐓𝐞𝐥𝐞𝐩𝐡𝐨𝐧𝐞 𝐥𝐢𝐧𝐞. 

5. Our report series - SafetyNiti2024 - showing gaps/opportunities/best practices in the top 10 automobile brands' OSH policies for their supply chain, under India's NGRBC, acknowledged and referred to. 

6. Our several 𝐫𝐞𝐜𝐨𝐦𝐦𝐞𝐧𝐝𝐚𝐭𝐢𝐨𝐧𝐬 𝐨𝐧 𝐠𝐥𝐨𝐛𝐚𝐥 𝐛𝐞𝐬𝐭 𝐩𝐫𝐚𝐜𝐭𝐢𝐜𝐞𝐬 𝐢𝐧 𝐜𝐨𝐦𝐩𝐚𝐫𝐚𝐛𝐥𝐞 𝐜𝐨𝐮𝐧𝐭𝐫𝐢𝐞𝐬 𝐞𝐠. 𝐭𝐡𝐞 𝐏𝐡𝐢𝐥𝐢𝐩𝐩𝐢𝐧𝐞𝐬, 𝐓𝐡𝐚𝐢𝐥𝐚𝐧𝐝, 𝐒𝐨𝐮𝐭𝐡 𝐊𝐨𝐫𝐞𝐚, 𝐞𝐭𝐜 𝐢𝐧𝐜𝐥𝐮𝐝𝐞𝐝. 

𝐈𝐧𝐝𝐢𝐚'𝐬 𝐄𝐜𝐨𝐧𝐨𝐦𝐢𝐜 𝐒𝐮𝐫𝐯𝐞𝐲 2024-25 - chapter "𝐄𝐌𝐏𝐋𝐎𝐘𝐌𝐄𝐍𝐓 𝐀𝐍𝐃 𝐒𝐊𝐈𝐋𝐋 𝐃𝐄𝐕𝐄𝐋𝐎𝐏𝐌𝐄𝐍𝐓: 𝐄𝐗𝐈𝐒𝐓𝐄𝐍𝐓𝐈𝐀𝐋 𝐏𝐑𝐈𝐎𝐑𝐈𝐓𝐈𝐄𝐒"

Labour Productivity-Working Conditions linkage: Theoretical Foundation 

Attention to OSH is a sign of enlightened management. The idea that OSH is only an expense to businesses or the country, is a misunderstanding that needs correcting. It’s an investment. Multiple researchers have documented theoretical, correlational and causal arguments, linking productivity and improved working conditions.  

“When work conditions are improved, workers work harder/put in more effort, and this improves worker productivity. When firms provide a “gift” of better working conditions than what is available at other workplaces, workers give the “gift” of work above the minimum work standard."

George Akerlof, Economics Nobel Laurate  

The GDP loss due to Occupational Accidents and Illnesses in India is at least c.4% At the global level, ILO and EU-OSHA estimate the GDP loss due to Occupational Accidents and Illnesses at c.4%. For India, the loss is estimated to be 4-14%. Please write to us at team@safeinindia.org for our detailed estimate.  

Labour Productivity is strongly correlated to working conditions 

There is a strong positive correlation between labour productivity and working conditions as highlighted by the relationship between the Labour Rights Index scores based on labour policies (Wage Indicator Foundation, Netherlands) and labour productivity for the top 20 non-OECD manufacturing economies (ILO data). 

Graph: Labour Rights Index Score vs Productivity

Labour Rights Index Score (X-Axis): Scores based on labour policies by Wage Indicator Foundation (Netherlands)  

Productivity (Y-Axis): ILO data for GDP per hour worked (GDP constant 2017 international $ at PPP) in 2023 

Evidence from Chile, Costa Rica and Bangladesh 

Data from Chile and Costa Rica (manufacturing and construction sectors between 20 to 30% of total GDP, like India) demonstrate a positive correlation between the reduction of worker accidents and improving labour productivity.  

Please write to us at team@safeinindia.org for our detailed analysis on data from ILO’s statistics on occupational safety and health indicators and ILO’s Statistics on labour productivity 

Post the Rana Plaza disaster, Bangladesh's garment industry has grown faster than any other country, both in absolute terms and relative to competitors, despite tightening labour rules, regulations, audits, etc. (Sources: Journal of Development Economics and Econometrica).  

Please write to us at team@safeinindia.org for us detailed analysis on data from the Ready-Made Garments Sector.  

MSME productivity is half of global emerging market average: 

McKinsey Global Institute’s 2024 report highlighted that Indian manufacturing MSMEs are only 14% as productive as large companies on average (vs 29% in all emerging economies (Brazil, India, Indonesia, Kenya, Mexico, and Nigeria)). Indian MSMEs lower productivity is potentially contributing to India’s low Labour Productivity. Improved working conditions, especially occupational safety and health can lay the groundwork for subsequent gains in labour productivity, as evidenced by successes in other countries. 

Click here to read- McKinsey Global Institute's 2024 Report

A few other recommendations to enhance occupational safety, especially in MSMEs and therefore labour productivity in India , that we have been recommending: 

• Improving reporting of accidents and injuries. What gets measured, gets done. 

• Increasing OSH capability and capacity of institutions at national and state levels 

• Collaboration of industry, government and social sector, e.g. In case of automotive sector: Top 10 brands, SIAM, ACMA, DHI, Labour Ministry, MoMSME, DG FASLI, etc. 

• Increasing focus on prevention, training, and compliance (monitoring & audits) 

• Improving corporate responsibility at the apex of the value chains, in line with NGRBC 

• Creating business case(s) for safety, especially for low-hanging fruit. 

• Stronger incentives to the industry for improving OSH. 

• Exploring technology-enabled solutions.

Attention to OSH will also make India a more favourable destination for FDIs and exports considering upcoming EU-CSDDD and other HRDD legislations, which although currently facing some headwinds are here to stay. Indeed, prioritising OSH also promotes mindfulness and greater empathy in society. 

Do you agree or disagree? Any suggestions? Do write to us at team@safeinindia.org