Aspirants wait to board a train to go home after completing the Uttar Pradesh constable civil police direct recruitment examination in Lucknow. File
| Photo Credit: The Hindu

India is not producing enough good quality jobs for its people. A good quality job provides dignity, adequate compensation, an opportunity for learning, and advancement for those who strive. Instead, many jobs are unpaid, informal, and dead end. Worse, the seemingly low unemployment rate masks the fact that to count as employed, a person needs to have reported working for only one month in an entire year.

The dearth of quality employment, particularly among the youth, is a ticking time bomb that threatens not just our economy, but the very legitimacy of our state. If the government fails to create avenues for social and economic participation for young people, it will inevitably breed frustration.

A twofold problem

The political problem is twofold: how do we give people a sense of dignity and purpose, and the means for financial support? Traditionally, people have derived dignity and purpose through a combination of community, work, and political engagement. However, the package deal of liberalism and capitalism have deprioritised traditional sources of community and increased the importance of work in conferring social standing and belonging. As a result, work has become the dominant entry point into a broader sense of community and political engagement.

While the elite find purpose and status through their control over societal discourse and decision-making, which also bring them substantial financial rewards, large sections of our population feel they lack both dignity and financial security. This disparity is likely to worsen as technological advancements and capital concentration potentially displace large numbers of workers, perhaps permanently. In a large democracy such as India, such concentration of purpose and financial gain among the elites can erode faith in the system and lead to political instability.

This challenge — how we structure our society, what we value, and how we include everyone — is fundamentally political. Yet, the political response has been inadequate, oscillating between deferring to market forces and resorting to short-term partisanship. The market-oriented approach is reflected in the superficial mantra of ‘creative destruction,’ suggesting that old jobs and industries will be seamlessly replaced by new and better ones. Meanwhile, some politicians and capitalists have mooted universal basic income (UBI) as a solution. UBI is a minimum “income” received by all citizens of a given population as financial transfers from the government without having to work.

Setting aside the question of UBI’s financial feasibility, it is important to recognise that inequality and an assault on human dignity are inherent in the very concept. UBI implies that a significant portion of the population is no longer needed in the economy, with a smaller subset “paying” for the rest. Its very premise concedes that technology and capital will create outsized winners while the majority will merely survive on their largesse. This approach fails to address people’s need to feel relevant and capable, and ignores the loss of dignity that comes from not contributing meaningfully to society. It does not, thus, account for the possibility that UBI might encourage more anger and populism because people want to contribute and thrive, not just survive on the sidelines.

There is a risk to democracy as a whole as well. UBI would shift focus from structural reforms to mere economic transfers and thus entrench elite power by insulating them from pressures to address fundamental inequities in the economy and labour markets. It risks recasting the state as a mere distributor of funds rather than the architect and arbitrator of societal processes required to create a just and participatory social and economic system.

Addressing structural issues

The partisan response has been to lob the issue between parties for short-term electoral gains instead of responding to the ongoing structural transformation of our society. Some political leaders are mindful of the long term, but institutionally, parties have become too narrow in their scope to address larger questions such as unemployment and have reduced their ambitions to winning elections alone. However, divesting societal issues to civil society or government in order to function solely as election-winning machines jeopardises their long-term legitimacy. This is because democracy is about more than elections — it is about creating a social contract that works for everyone.

In fact, the failure to anticipate and address long-term structural issues is a key reason why people feel neglected by the political class and view politics as a cynical game. When people believe the political system is incapable of addressing pressing challenges, they lose faith in democratic institutions. Thus parties and institutions must find ways to address structural issues, including unemployment, inequality, and dignity; else, people will seek alternatives, rendering political parties irrelevant. We are witnessing this globally through the rise of populism, authoritarianism, and civic disengagement.

Political parties must provide meaningful leadership by addressing structural issues head-on without resorting to deflection or partisanship. The future of Indian democracy — and the continued relevance of our political institutions — hinges on our ability to restore a broader sense of public purpose and economic participation to the centre of our national dialogue.

Ruchi Gupta, Executive Director of the Future of India Foundation, which anchors an initiative to harness the political process to create aspirational employment opportunities for youth at the district level

Tamil Nadu fares better than most States on employment metrics, but more must be done to tackle underemployment and gaps between skills and education, as the State produces the highest number of graduates in India.

While there is no accurate data to measure India’s employment scenario, the periodic labour force survey (PLFS) conducted by the Union Ministry of Statistics and Programme Implementation offers some insights.

The annual PLFS from July 2022-June 2023 measured different aspects of employment across States and nationwide. Among the sample population, it considered the activity in which a person spent relatively long time during 365 days preceding the date of survey as the principal activity status, while the economic activity performed for 30 days or more, adding to the principal status was considered the subsidiary economic status.

Also read | 42% of women working in India’s factories reside in Tamil Nadu: Stalin

Put together the principal and subsidiary economic status, that is, Tamil Nadu’s (T.N.) labour force participation rate (LFPR), which is the percentage of persons in the labour force – those working, or seeking, or available to work – was 46%, compared with 42.4% nationally. 

More women workers

Under the principal plus subsidiary status, the percentage of employed persons, or Worker Population Ratio (WPR) in T.N. was 44%, compared with 41.1% nationally. The female WPR was 31.6%, higher than the 27% nationally.

In T.N. 31.6% earned a regular wage, compared with 20.9% nationally.

The unemployment rate among the educated, that is, those who have attained secondary level education, was 9.4% in T.N., compared with 7.3% nationally. The unemployment rate among graduates was 16.3% in the State, higher than 13.4% at the all India level, and the youth unemployment rate (15-29 y/o) was 17.5% for T.N., significantly more than the nationwide 10%.

PLFS also measures the workforce according to the current weekly status (CWS) approach, which considers those who worked for at least one hour, or was seeking/available for work for at least an hour on any day in the past week preceding the survey date. As per this metric, T.N.’s LFPR was 44.5%, compared with 40% as the national average, while WPR was 41% against the national level of 38%.

T.N.’s unemployment rate going by the CWS approach, was 7.9%, against 5.1% nationally.

The PLFS considers proprietary and parT.N.ership enterprises as the informal sector. On that basis, informal workers were 65.7% in T.N., against 74.3% nationally. T.N.’s unemployment rate was 4.4%, compared with 3.2% nationally in this segment.

Also read |  T.N. finalising Employment Policy

One of the ways to assess employment in the formal sector is to consider net Employees’ Provident Fund Organisation subscriber additions. Maharashtra, Karnataka, Tamil Nadu, Gujarat and Haryana combined constituted around 58.24% of net addition in the month of May 2024, the Union government said.

T.N. has the highest number of factories in India. More than 40% of factory employment was in Tamil Nadu, Gujarat, and Maharashtra combined, according to the Economic Survey 2023-24. But the highest employment growth between FY18 and FY22 was seen in states with a higher share of young population, which included Chhattisgarh, Haryana and Uttar Pradesh, according to the Survey.

The DMK government has said it has attracted investments of more than ₹10 lakh crore and created about 31 lakh jobs in the past three years. In June, Chief Minister M.K. Stalin told the Assembly that his government would fill more than 75,000 vacancies across government departments within 18 months.

He also said 65,483 youths have been hired hired across departments in the past three years, while overall the state government has ensured jobs for 5,08,055 people.

A. Kalaiyarasan, an economist with the Madras Institute of Development Studies said T.N. has more unemployed graduates due to the higher gross enrolment ratio (GER).

More graduate numbers

T.N.’s GER in higher education is almost double the national average, according toa 2024-25 State Higher Education Department policy note, which quoted the All India Survey on Higher Education (AISHE).

“Our youth enrolment in education is not keeping pace with the employment opportunities. So some youth end up working in the gig economy like Swiggy and other e-commerce sites, hoping to land a better job in future,” Mr. Kalaiyarasan said.

Despite T.N. having the highest women workforce participation, Mr. Kalaiarasan said wage discrimination must be addressed. He pointed to the monthly earnings gap between men and women, with women in regular jobs earning ₹12,969 against ₹17,476 for men in 2020-21.

Mr. Kalaiyarasan also said T.N. must incentivise employment generation over capital investments.

‘Incentivise labour’

Srivats Ram, Chairman, Confederation of Indian Industry (CII), T.N. State Council said historically, industrial promotion schemes incentivised based on the amount of capital or investment being deployed. But now this is shifting toward attracting labour intensive sectors like electronics, non-leather footwear, etc, he said.

Mr. Ram also warned of the skill gap among recent graduates, making them hard to be placed at jobs immediately pointing to the need for more training programmes. “Sometimes it is easy to train for necessary skills with one or two programs. But it becomes challenging in segments where technology is changing rapidly,” he added.

Editorial | In search of jobs: On the challenge of employment generation

During the IT boom, it was easy to get hired after graduation. But the industry has matured and net job additions have been coming down, amid a slowdown in the industry lately. While the number of global capability centres had grown, their requirement for specific skills made skilling initiatives essential, Mr. Ram observed.

He said CII is working with Anna University to update their curriculum.

He said T.N. government’s Naan Mudhalvan scheme is a good initiative for entry level job creation, but said its scope could be expanded with involvement of more firms and internships could be part of the program.

Extremely high underemployment

As on March 31, a whopping 54,25,114 people had registered across 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 Labour Welfare and Skill Development Department (LWSD) policy note for 2024-25. But K. Veera Raghava Rao, Secretary, LWSD Department said this number “may not necessarily reflect a shortage of job opportunities as a majority of these people are working elsewhere,” pointing to the extremely high level of underemployment in T.N..

Mr. Rao, added that through the Naan Mudhalvan initiative, the government is engaging colleges, industrial training institutes (ITIs), and polytechnics across the state to provide training and assist students in securing jobs.

The government has established industry 4.0 technology centres in ITIs state-wide for the students to keep pace with latest industry trends. And many MSMEs are using these centres, Mr. Rao said, adding the curriculum at polytechnics is being updated to align with industry needs. Additionally, industries are expanding their internship programs”, he said.

The state’s employment landscape is, however, expected to wiT.N.ess significant demand in sectors like electronics, automobile, and auto component, including electric vehicles and solar cell manufacturing, as investments in these industries rise. Tamil Nadu is expected to generate more than one lakh jobs in the next few years, especially in smaller cities and towns like Krishnagiri, Hosur, Coimbatore, reckoned P. Subburathinam, Chief Strategy Officer, TeamLease Services Limited, a staffing firm.

There are significant disparities in job opportunities between urban and rural areas. Rural areas often lack the infrastructure and investment needed to create jobs, leading to migration to urban centres and associated socio-economic issues, Mr. Subburathinam added.

Another concern has been the probable labour displacement due to rising automation, he warned.

K. E. Raghunathan, National Chairman, Association of Indian Entrepreneurs said unemployment is the key issue across India. Industry and educational institutions must align in addressing the skills gap concern. An option of adding another semester to undergo practical training like in the case of medical courses must be considered, Mr. Raghunathan said.