TN ‘attracts’ investors but job crisis still looms large

State which signed 138 MoUs worth ₹80,900 crore in past 23 months, saw unemployment rate peak to 49.8% in April this year; experts say many of the projects despite promising employment will only remain on paper  

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On December 13 this year, around 5.50 lakh candidates in Tamil Nadu appeared for 10,000 vacancies in the state police department. On December 10, nearly 20,000 applied for 126 posts under the cooperative department in Cuddalore district alone. In April this year, the government received around 1.03 lakh applications for 600 vacant assistant engineer posts in the electricity board, exams for which are yet to be conducted.

The above data is just a handful of statistics that show the high number of employment seekers in the southern state. This despite the fact that the state remains the top destination for foreign investments in the country.

At 49.8 per cent, Tamil Nadu reported the highest unemployment rate in April this year due to the COVID-19 pandemic, the Centre for Monitoring Indian Economy (CMIE) said. In December, the unemployment rate fell to 1.1 per cent. While the state government attributes the improvement to the new investments it has attracted, observers say only a few of the projects for which Memorandum Of Understanding (MoUs) were signed have seen the light of the day.

According to a data by Guidance Tamil Nadu, a nodal agency for industrial promotion functioning under the state, a total of 138 MoUs were signed worth ₹80,900 crore in the last 23 months.

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“During the pandemic alone we have signed 73 MoUs worth ₹60,714 crores (including 18 MoUs signed on December 14) that aims to create about 1.30 lakh employment opportunities,” said a senior official of the agency.

The Global Investors Meet conducted in 2015 and 2019 by the state gave a shot in the arm for investments.

“Through the two investors meet, we were able to attract more than 80 per cent of the projects for which MoUs have been signed and many of them have commenced their operations. About 72 per cent of the MoUs signed in 2015 and 27 per cent in 2019, were realised and many more are in the offing. The MoUs signed during pandemic are mostly automobile manufacturing, renewable energy and electrical vehicles,” the official said. The agency is in the process of collecting data on how much employment these projects have generated.

Industry insiders say while the MoUs give hope, all of them may not be realised.

“It is true that most of the MoUs signed would not turn into reality. However, the companies showing interest to do business here gives us motivation,” said one of the representatives from a commerce and industry association.

“The automobiles and automotive sector witnessed a good recovery post-lockdown. The backlog work orders have sustained the employment opportunities,” she said.

Need for labour-intensive industries

Most of the companies – a mix of manufacturing and IT/ITES sectors – which have signed the MoUs have showed interest in setting up industries in Chennai, Kanchipuram and Chengalpattu districts. While they promise to create employment opportunities ranging from 25 (IT/ITES) to 25,000 jobs (footwear manufacturing units) per company, many of them are still undecided on the location even after six months of signing the MoU.

Experts, however, say that it would be beneficial to the state, if it attracts more investments from labour-intensive industries.

“Tamil Nadu has a lot of labour-intensive industries. About 65 per cent of the population in the age group of 14-59, are dependent on labour-intensive employment. So if such industries bring investments to the state, it will be helpful in creating more employment,” said PG Babu, economist and director, Madras Institute of Development Studies.

The three important labour-intensive industries in the state are the garment industry in Tiruppur, leather industry in northern parts like Vellore and fireworks industries in Sivakasi.

“After the implementation of GST, the labour force participation in the state has drastically come down. More than demonetisation, GST has affected them more. That needs to be addressed,” said Babu.

He also added that if the investments are from non-labour intensive industries, they will not help much in creating employment.

“The government then must provide skill and reskilling development programmes. Only then people can go to higher-end jobs,” Babu added.

Fate of MoUs

Economist J Jeyaranjan said most of the MoUs just remain on paper. The foreign companies express their intent to do business here but it cannot be expected that all of them gets materialised, he said.

“The foreign companies choose to do business in Third World countries because here wages paid to employees would be low. They also get free land and free electricity from the government. Only that variable cost differs from developed countries. Otherwise the companies would use same kind of machineries. So the production cost can be minimised and they can maximise the profit. This is called ‘racing to the bottom’. If this is the case, one can understand what kind of job he or she can get in these companies,” he said.

According to him, 90 per cent of jobs in the country in any industry is temporary and the quality of work is going down.

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“Today a peon’s job in a government office is better than a job in the IT industry. That’s why there is a lot of competition for government jobs like police, teacher, etc.” Jeyaranjan said.

Also in many states, the labour welfare laws are often amended in order to reduce the commitment of the Centre and also the corporates, he added.

“This reduction of commitment is normally referred to as ‘ease of doing business’. The Centre has incentivised that. So the states which toe the line they got .5 per cent increase in getting borrowing instead of 3 per cent. That’s how most of the states borrowed from the Centre in this pandemic” Jeyaranjan said.