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Tamil Nadu ranks better than most states on employability parameters, but more needs to be done to address underemployment and the gap between skills and education, as the state produces the largest number of graduates in India.
Although there is no accurate data available to measure India’s employment scenario, some information comes from the Periodic Labour Force Survey (PLFS) conducted by the Union Ministry of Statistics and Programme Implementation.
The annual PLFS from July 2022 to June 2023 measured various aspects of employment across states and the country. Among the sample population, it considered the activity in which a person spent a relatively long time during the 365 days preceding the survey date as the main activity status, while the economic activity performed for 30 days or more in the main status was considered as a subsidiary economic status.
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Putting together the core and subsidiary economic conditions, Tamil Nadu’s (TN) labour force participation rate (LFPR), which is the percentage of persons in the labour force – who are working, or seeking work, or available to work – was 46%, while at the national level it was 42.4%.
more women workers
Under the Principal Plus Subsidiary Status, the percentage of employed persons or worker population ratio (WPR) in Tamil Nadu was 44%, as against 41.1% at the national level. The WPR of women was 31.6%, higher than the national level of 27%.
In Tamil Nadu, 31.6% of people get regular salary, while at the national level it is 20.9%. The overall unemployment rate of Tamil Nadu is 4.4%, while at the national level it is 3.2%.
The unemployment rate among educated people, i.e. those with secondary level education, was 9.4% in Tamil Nadu, compared to 7.3% at the national level. The unemployment rate among graduates in the state was 16.3%, higher than the all-India level of 13.4%, and the youth unemployment rate (15–29 years) was 17.5% for Tamil Nadu, well above the national level of 10%.
The PLFS also measures the workforce according to the current weekly status (CWS) approach, which considers those who worked for at least one hour on any day in the past week before the survey date, or were seeking/available for work for at least one hour. According to this metric, TN had an LFPR of 44.5%, against the national average of 40%, while the WPR was 41% against the national level of 38%.
As per the CWS approach, Tamil Nadu’s unemployment rate was 7.9%, while at the national level it was 5.1%.
The PLFS considers proprietorship and partnership enterprises as the informal sector. On this basis, Tamil Nadu had 65.7% informal workers, while at the national level it was 74.3%.
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One of the ways to assess employment in the formal sector is to consider the net subscriber additions of the Employees’ Provident Fund Organisation. The central government said that Maharashtra, Karnataka, Tamil Nadu, Gujarat and Haryana together accounted for about 58.24% of the net additions in the month of May 2024.
Tamil Nadu has the highest number of factories in India. More than 40% of factory employment is concentrated in Tamil Nadu, Gujarat and Maharashtra, according to the Economic Survey 2023-24. But according to the survey, the highest employment growth between FY18 and FY22 was seen in states with a higher share of youth population, including Chhattisgarh, Haryana and Uttar Pradesh.
The DMK government has said it has attracted investments of over ₹10 lakh crore and created nearly 31 lakh jobs in the last three years. In June, Chief Minister MK Stalin told the Assembly that his government would fill over 75,000 vacancies in government departments within 18 months.
He also said that 65,483 youths have been given jobs in various departments in the last three years, while overall the state government has ensured jobs for 5,08,055 people.
Economist A. Kalaiyarasan of the Madras Institute of Development Studies said Tamil Nadu has a high number of unemployed graduates because of the high gross enrolment ratio (GER).
More number of graduates
According to the state higher education department’s 2024-25 policy note, which cites the All India Survey on Higher Education (AISHE), Tamil Nadu’s GER in higher education is almost double the national average.
“The enrolment of our youth in education is not keeping pace with employment opportunities. So some of the youth work in the gig economy like Swiggy and other e-commerce sites in the hope of getting a better job in the future,” Mr. Kalaiyarasan said.
Despite Tamil Nadu having the highest workforce participation of women, Mr. Kalaiyarasan said wage discrimination must be addressed. He pointed to the gap in monthly earnings between men and women, where women in regular jobs earned ₹12,969 in 2020-21 while men earned ₹17,476.
Mr. Kalaiyarasan also said that Tamil Nadu should encourage employment creation rather than capital investment.
‘Encourage labour’
Srivatsa Ram, chairman, Confederation of Indian Industry (CII) Tamil Nadu State Council, said historically, industrial incentive schemes were incentivised based on the amount of capital or investment. But now it is moving towards attracting labour intensive sectors like electronics, non-leather footwear, etc, he said.
Mr Ram also warned about a skills gap among recent graduates, which makes it difficult for them to find a job immediately, pointing to the need for more training programmes. “Sometimes it is easy to train for the required skills with one or two programmes. But this becomes challenging in sectors where technology is changing rapidly,” he said.
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During the IT boom, it was easy to get a job after graduation. But the industry has matured and recently net job attrition has been declining amid a slowdown in the industry. Mr Ram said the number of global capability centres has increased, but their need for specific skills has made skilling initiatives necessary.
He said CII is working with Anna University to update their curriculum.
He said the Tamil Nadu government’s Naan Mudhalvan scheme was a good initiative for generating employment at the entry level, but its scope could be expanded with the participation of more firms and internships could also be made part of the programme.
extremely high underemployment
As of March 31, 54,25,114 people had registered with the state’s district employment and career guidance centres through the employment portal (www.tnvelaivaaippu.gov.in). Of these, 25,00,134 registrants were men, while 29,24,395 were women and another 285 were transgenders, according to a 2024-25 policy note of the Labour Welfare and Skill Development Department (LWSD). But LWSD department secretary K. Veera Raghava Rao said the numbers “do not necessarily reflect a lack of job opportunities as most of these people are working elsewhere,” pointing to the extremely high level of unemployment in Tamil Nadu.
Mr. Rao said that through the Naan Mudhalvan initiative, the government was involving colleges, Industrial Training Institutes (ITIs) and polytechnics across the State to provide training and help students secure jobs.
The government has set up Industry 4.0 technology centres in ITIs across the state to keep students abreast with the latest industry trends. And many MSMEs are using these centres, Mr. Rao said, adding that the curriculum in polytechnics is being updated to suit the needs of the industry. Additionally, industries are expanding their internship programmes”, he added.
However, the state’s employment scenario is expected to see significant demand in sectors such as electronics, automobiles and auto components, including electric vehicles and solar cell manufacturing, as investments in these industries grow. Tamil Nadu is expected to generate over one lakh jobs in the next few years, especially in smaller cities and towns such as Krishnagiri, Hosur, Coimbatore, said P. Subburathinam, chief strategy officer at staffing firm TeamLease Services Ltd.
There are great disparities in employment opportunities between urban and rural areas. Mr. Subburathinam said rural areas often lack the infrastructure and investment needed to create jobs, leading to migration to urban centres and also creating socio-economic problems.
Another concern, he warned, is potential worker displacement due to increasing automation.
K E Raghunathan, national president of the Federation of Indian Entrepreneurs, said unemployment is a major issue across India. Industry and academic institutions should come together to address the skill gap concern. In the case of medical courses, the option of adding another semester to undergo practical training should be considered, Mr Raghunathan said.
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