8.

3 Employment & Labour Welfare

349

8.3 EMPLOYMENT & LABOUR WELFARE

Introduction
A participatory planning process is an essential pre-condition for
ensuring equity as well as accelerating the rate of growth of economy. In
order to address the concerns of equity in a sustainable manner it is
necessary to ensure significant improvements in the quality of labour,
productivity, skill development and working conditions, and to provide
welfare and social security measures particularly, to those in the unorganized
sector. Further, it is also necessary to ensure that all adult persons looking
for work are employed at levels of productivity and income, which are
necessary to afford them a decent life. A significant proportion of workers
presently earn below the subsistence wages. Another unfortunate facet of
labour markets is the persistence of child labour which must be eradicated in
the shortest possible time.
Present status of the Labour market
The present status of workforce has been brought out by the Census
data. The Census collects information on economic activity of every individual
and provides details on workers and non-workers and structure of the
employed persons by traditional four-fold classification and nine-fold National
Industrial classification (NIC).
Table -1
Population, Workers and Non-workers in 1961, 1981, 1991 & 2001
(No. in lakhs)
Category

1961

1981

Population

337

100

I Total
Workers
(i) Main
workers

154

45.7

--

--

485
(1.83)
202
(1.37)
190
(1.06)
12

%
100
41.7
39.2

1991
559
(1.44)
242
(1.82)
228
(1.83)
14

--2.5
(ii)Marginal
workers
II. Non183
54.3
283
58.4
317
workers
(Figures in brackets are Annual Compound Growth Rates)

%
100

2001

2.5

621
(1.07)
278
(1.40)
237
(0.38)
41

56.7

343

43.3
40.8

%
100
44.8
38.2
6.6

55.2

It is seen from the Table-1 that during the sixties and seventies, the
growth of population increased at a faster rate than that of the labour force.
Between 1961 and 1981, when the growth of population increased by 1.83%,
per annum, the working population had increased at an annual rate of only
1.37%. However, this trend got reversed during the last two decades. The
Census 1991 and 2001 results show that Tamil Nadu's work force has been
increasing at a faster rate than the growth of population. During the eighties,
while the growth of population increased at an annual rate of 1.44% per
annum, the working population increased at an annual rate of 1.82%.
Although, the growth rates for the total population as well as the working

8.3 Employment & Labour Welfare

350

population had shown decelerating trends during the nineties yet, the working
population had increased at a faster rate of 1.40% as against the population
growth rate of 1.07%, per annum.
Four fold classification of workers
The four-fold classification of census workers reveals a declining share
of cultivators and household industry workers in the total workers. The
proportion of cultivators had come down from 42% in 1961 to 25% in 1991
and further down to 18.4% in 2001. The share of agricultural labour which had
increased
from 18.4% in 1961 to 36.2 % in 1991 however, declined to
31.1% in 2001. Thus, the proportion of agricultural workers (cultivators and
agricultural labours) that had hovered around 61% till the eighties declined
for the first time to less than one half of the total workers (49.5%) during the
nineties.
Table - 2
Industrial classification of workers in 1961, 1981, 1991 & 2001
( No. in lakhs)
Industrial
Category
a) Cultivators
b)Agricultural
Labour
Agricultural
Workers
(a+b)
c) House hold
Industry
Manufacturing
d) Other workers
Total Workers

1961

1981

1991

2001

64.55

42.0

58.15

28.8

60.42

25.0

51.14

18.4

28.28

18.4

67.68

33.5

87.57

36.2

86.65

31.1

92.83

60.4

125.83

62.3

147.99

61.2

137.79

49.5

20.60

13.4

9.73

4.8

8.70

3.6

14.59

5.3

40.27

26.2

66.42

32.9

85.25

35.2

125.74

45.2

153.70

100.0

201.98

100.0

241.94

100.0

278.12

100.0

(Source: Census 1961, 1981,1991 and 2001).

The employment in the secondary and tertiary sectors is on the rise.

The secondary sector employment had increased from 37.91 lakhs in 1991 to
57.68 lakhs in 2001 exhibiting an annual growth of 5.22%. Similarly, the
employment in the tertiary sector had gone up from 50.61 lakhs in 1991 to
74.64 lakhs in 2001, indicating an annual growth of 4.75%. The fall in the
share of primary sector employment by 11.1% points between 1991 and 2001
has been absorbed in the secondary and tertiary sectors by 5.1 and 6.0 %
points, respectively.
Quality of employment
The quantitative problem of employment / unemployment basically
pertains to the adequacy of job opportunities for the growing labour force.
However, given the underemployment situation and low productive
employment in respect of a large proportion of working population, the quality
of employment assumes considerable importance. The bulk of the rural
labour force consists of raw and unskilled people who are capable of manual

8.3 Employment & Labour Welfare

351

work only. Again, self-employed persons helping in household enterprises

may not be strictly unemployed although their employment is often un remunerative. As per the NSS data, the proportion of self employed workers
at the State level declined from 48.6% in 1977-78 to 36.1% in 1999-2000. The
existence of low productive employment together with unemployment and
under - employment accounts for a high incidence of rural poverty both at the
State and the National level.
Sectoral Composition of Workers by Sex
The steady declining trend in the primary sector employment for male
workers is captured by their declining proportions. The share of male workers
in the primary sector to total workers declined from 57.4 per cent in 1977-78
to 42.9 percent in 1999 - 2000 (Table -3). The corresponding ratios for
female workers were 73.2 and 62.8, respectively.
Table-3
Composition of Workers by sex (NSS) (%)
NSS

Primary

Secondary

M
F
M
F
1977-78
57.4
73.2
19.7
16.2
1983-84
49.2
70.4
23.1
16.4
1987-88
46.1
65.8
24.6
20.4
1993-94
45.5
67.3
23.6
19.0
1999-2000
42.9
62.8
25.7
20.7
Source: NSS 32nd, 38th, 43rd 50th and 55th Rounds.

Tertiary
M
22.9
27.6
29.3
30.8
31.4

F
10.6
13.1
13.8
13.7
16.5

Total
M
100
100
100
100
100

F
100
100
100
100
100

The loss of share in the primary sector employment has been gained
by the secondary and tertiary sectors in different proportions in respect of
males and females. In the case of females, the decline in primary sector
employment has been more or less equally gained by the secondary and
tertiary sectors. However, in the case of males, while their share in secondary
sector employment stagnated around 24 - 25 per cent between 1987-88 and
1999 - 2000, tertiary sector had absorbed relatively a larger proportion. While
the share of male employment in the tertiary sector had steadily increased
from 22.9 per cent in 1977-78 to 31.4 per cent in1999 - 2000, the initial
change for females from 10.6 per cent in 1977-78 to 13.1 per cent in 1983-84
remained at the same level up to 1993-94 and showed a significant increase
in 1999 - 2000.
Factory workers
In Tamil Nadu, there were 24,169 registered factories employing about
10.68 lakh persons (on 1st May 1997). It has now increased to 29,080
employing about 11.86 lakhs persons as on 1st May, 2001. Apart from
registered factories, there are 4,375 unregistered factories engaged in
manufacturing activities in the State.

352

8.3 Employment & Labour Welfare

Child Labour
A welcome development is a significant decline in Tamil Nadu's child
labour. The incidence of child labour is higher mostly in unorganized, informal
and unregulated sectors. Higher incidence of child labour has been noted in
home-based activities, apprentice in traditional crafts and in certain factory
employment like match and fire works in Sivakasi, etc. As per 1991 census
child labour accounted for 2.39 % of total work force. Unlike the national
picture, female child workers (3.64) outnumbered the male children (1.7) in
the State. The estimated number of child labour (5 -14 Years) in 1987-88 was
13.3 lakhs. This declined to 10.26 lakhs during 1993 - 94. However, the latest
NSS estimates of 55th round show that the child labour has declined by more
than 50% between 1993-94 and1999-2000. For the first time, the structure of
child labour has also undergone a change. Female child labour accounted for
about 66% in the total child labour in 1987-88 and 1993-94. However, the
latest estimate shows that the female child labour had declined to 43.6% in
1999-2000. The striking feature is that the bulk of decline in the child labour
had come from the principal status workers.
The withdrawal of female children from the child labour force indicates
a positive outcome of various socio-economic programmes being
implemented in the State. The State's efforts in reducing and ultimately
eliminating the child labour through programmes like Nutrition, Noon-Meal
Programme, Free Supply of Uniforms, Books, Free bus pass, Girl child
development, marriage assistance and other incentive schemes, apart from
creation of awareness among the parents for increasing the school enrolment
and continuation of education appear to have brought about this significant
outcome.
Organised sector employment
In Tamil Nadu the total organized sector employment at 25.45 lakhs
(18.6 lakhs males and 7.4 lakhs females) accounted for 8.8% of the total
workers (289.8 lakhs) in 1999 - 2000. Thus, an overwhelming majority of
workers are in the un-organized sector, outside the purview of statutory social
security cover. Between 1983 and 1993-94 employment in the organized
sector had increased at an annual rate of 1.55%. However, during the most
recent period of 1993-94 to 1999-2000 there has been a deceleration in the
growth of organized sector employment, despite the private sector
employment accelerating from 0.78 % per annum
during 1983-94 to
3.21 % per annum during the period 1994-2000.
A notable feature which has emerged from the census data is the slow
down in the rate of population growth, increase in the share of the aged and
increasing participation of the younger age group in education. These are
likely to moderate the growth of labour force. However, this trend has
increased the dependency rate. The situation of surplus labour, mostly
unskilled, coupled with the employment of most of the workers in the unorganized segments of the economy, has given rise to unhealthy social
practices like bonded labour, child labour and poor working conditions and
lack of security for the workers. Hence, the challenge is to bring a qualitative
change in the structure and pattern of employment in terms of growth of high

8.3 Employment & Labour Welfare

353

quality work opportunities, apart from providing opportunities for skill formation
and development.
In order to tackle the twin problems of poverty and unemployment /
underemployment, the employment strategy will have to necessarily focus on
increasing the employment opportunities in consonance with the increasing
labour force. It is also essential that such employment opportunities are of
high quality so as to bring about a perceptible change in the income and
consumption.
Growth of Labour Force : 2001 - 02 to 2011 - 2012
Estimates of Labour - Force
As per NSS 55th round, the estimated labour force of Tamil Nadu in
1999-2000 is 297.51 lakhs. As per the computation, Tamil Nadu's labour force
is expected to increase from 304.68 lakhs in 2001-02 to 343.28 lakhs in 20112012 with the anticipated annual growth rate
of 1.2%.
However, with
marginally higher growth rate of labour force at 1.4 percent, per annum it is
expected to reach 351.51 lakhs in 2011-12. The details are given in Table.
Table - 4
Estimated Size of Labour - Force
(in lakhs)
Year

Population

Labour force

Labour force as a
percentage of
population
@1.2%
@1.4%
@1.2%
@1.4%
2000-01
621.11
301.07
301.67
48.47
48.57
2001-02
625.55
304.68
305.89
48.71
48.90
2002-03
630.59
308.34
310.17
48.90
49.19
2003-04
636.12
312.04
314.51
49.05
49.44
2004-05
642.04
315.78
318.92
49.18
49.67
2005-06
648.29
319.57
323.38
49.29
49.88
2006-07
654.00
323.41
327.91
49.45
50.14
2007-08
659.39
327.29
332.50
49.64
50.43
2008-09
664.52
331.22
337.15
49.84
50.74
2009-10
669.41
335.19
341.87
50.07
51.07
2010-11
674.09
339.21
346.66
50.32
51.43
2011-12
678.20
343.28
351.51
50.62
51.83
Note : RG Office Projections, ceteris, paribus, adjusted for latest Census
Estimates of Population.

An analysis of GSDP trends show that the growth of primary sector had
steeply decelerated from 5.06 per cent per annum during 1984-95 to 1.57
per cent per annum during 1994 - 2001 affecting income and employment for
about half of the working population in the State. The secondary sector posted
relatively higher growth rate of 6.30 per cent during this period, higher than
the long term growth rate of 5.33 per cent per annum during 1984 - 1995.
The tertiary sector registering an accelerated annual growth of 10.0
per cent was the principal contributory factor that had helped to sustain a
reasonable over all performance of the State economy during the period 1994
- 2001. Possibly, the Tertiary sector holds promise for promoting higher
quality of employment and greater employment potential particularly, for

354

8.3 Employment & Labour Welfare

educated unemployed and underemployed which however, hinge upon the

accelerated growth of infrastructure facilities including transport and
communication and supportive policies for increased wage - employment in
the Services Sector.
The computation of sectoral elasticities for 1993-2000 reveals that
the sectors holding promise for the future are 'Construction', 'Trade',
'Transport and 'Communication', and 'Financial Services'. 'Manufacturing '
sector could help in absorbing a part of the labour force newly emerging. The
negative elasticity in agriculture and community services show labour
displacement. Agriculture and allied activities is likely to continue to be a
major provider of employment opportunities to the bulk of the labour force.
However, it is unlikely that the existing proportion of labour force in agriculture
could be sustained. Given the magnitude of low-skill-low-quality employment,
even full employment at 273 days (SYP) per annum would not make much
dent on poverty situation, particularly in the rural areas. Hence, deliberate
policy interventions are required to promote high quality employment.
By achieving the Tenth Plan target of 8.0% per annum, the chronic
unemployment rate at 3.02 % in 2001-02 could be brought down to 2.20% in
2006-07 and to 0.46% by 2011-12 with the anticipated growth of labourforce
by 1.2% per annum.
However, if the economy is able to sustain a rapid growth rate of 9.0%
per annum during the Tenth and Eleventh Five Year Plan periods, there will
be significant dent on the chronic unemployment rate. The usual status
unemployment rate with a labour force of 1.4% per annum would be 2.33% in
2006-07 and 0.10% in 2011-12.
Specifically, sub-sectors like Textile Products, Non-metallic Mineral
Products, Leather Industry, Paper and Paper Industry and Food Products
offer considerable scope for augmenting income and employment. However,
manufacture of paper and paper products, electrical machinery apparatus and
other manufacturing industries including IT hardware have shown significant
increase in further absorbing qualified labour force.
The development of Information Technology and IT enabled services
offer good scope for employment for educated unemployed. The Government
policy should support such activities. This would open up high quality
employment opportunities to the educated persons. It is also essential that
work opportunities are created with skill attributes of the labour force and the
quality of employment in terms of providing adequate level of income for the
workers. Even here, there is a need for imparting composite skills for the
educated youth. Institutions training educated youth in IT should be advised
to provide them multiple skills including a bridge - course on language so
that they are in a position to move from mere data entry work to the use of
ready made user friendly soft- ware packages.
High quality employment will have to be generated in both the unorganised and organised private sector. Educational and training policies will
have to be reoriented for appropriate skill development which could upgrade
the quality of work force and make it capable of supporting a growth process
which generates high quality jobs.

8.3 Employment & Labour Welfare

355

The basic strategy on employment should be on promoting labour

intensive service sector and labour intensive manufacturing activities.
There is a tremendous scope for increasing employment opportunities
in the business and service sub-sectors.
Given the pattern of the skills of the labour force dominated by
presently illiterate and semi-literate persons, the thrust will have to be
necessarily on improving the employability of the un-employed and under
employed persons with appropriate skill that are in demand in the secondary
and tertiary sectors.
The vocational training for improving the employability of the labour
force would call for imparting composite skills unlike the traditional single line
(trade) training. The trade on tinkering should also include painting, lathe
operator in metal polishing, electrician in plumbing, interior decorator with
false ceiling and so on.
Tamil Nadu is better known for skilled repair services, particularly
automobile and electrical goods. The employment and income in repair
services appear to be declining. This is greatly explained by the sea- change
in the repair-technology and preference for replacement to repairs. The
former also appear to be cost effective. Road side technicians find it
extremely difficult to fix switches that are electronically operated. Since the
growth potential for automobile industry in this State is quite high, skill
upgradation programmes to existing technicians and new entrants in
mechanical, electrical and electronic system should be launched in each
district.
The employability of the unemployed should be increased with
appropriate skills and orientation in activities that are expanding including the
fast growth service sector. The shift from farm to non-farm sectors should be
accelerated with focus on agro-based activities particularly, food processing
and rural service sectors.
A vast unexploited potential exists in development of travel and
tourism in Tamil Nadu, known for temples and rich cultural heritage. The vast
coast line has not been put to potential use to develop tourism. Tourism
promotion can contribute substantially to the expansion of direct productive
employment in the State. Besides, it would also give a boost to the
employment in the traditional handlooms and handicrafts. The Government
should prepare a medium-term and long-term plan, for concentrated
investments in selected tourists spots / area and development and
upgradation of infrastructure with clear priority in terms of both domestic and
foreign tourists.
The potential for agro-exports has not been adequately exploited in the
State unlike States like Maharashtra. Agro-exports have tremendous high
quality employment potential. There is a need for training the work force in
agro-processing, packaging and related activities for export - oriented
production jobs.
There is a need for focussing on research and development,
dissemination of information, extension and training and development of
infrastructure for food parks. A policy environment should be created to

356

8.3 Employment & Labour Welfare

induce private sector investment in post-harvest operations / technology,

quality tests and control labs, cool chain facilities and agro -processing, etc.
Inadequacy of training capacity in quantitative terms and lack of quality
training appear to be hampering the employability of the trained persons.
Training provided by private institutions also considerably varies in terms of
quality due to lack of suitably trained faculty. These need to be addressed
specifically.
It may be mentioned that the quality of labour force alone determines
their employability abroad or in institutions of foreign origin including multinational organisations. With regard to the service sector, the vocational
training institutions and other institutions including those for para-medical and
auxiliary services should focus not only on domestic labour market but also
national and international markets. There appears to be greater demand for
para-medical / nursing services and other hi-tech activities for which globally
there are established standards. The training institutions should necessarily
produce candidates who are acceptable to the external organisations meeting
their own prescribed standards.
Manpower development to provide rising labour force with skills and
training according to the emerging demand pattern is essential to eliminate
the mismatch between the supply of and demand for labour.
Labour Laws
The labour laws, at present, encompass areas like industrial disputes,
wages, and minimum wages, security measures like Workmen's
Compensation Act, Equal Remuneration Act, Maternity Benefit Act, Child
Labour Act, Factories Act, Mines Act, Contract Labour Act, Welfare Fund
related Acts, etc. The basic objectives of these laws are to create a safe work
environment, provide the mechanism and the procedure to settle industrial
disputes and ensure minimum wages, payment of provident fund, Gratuity
and Bonus etc., besides other statutory benefits to workers.
In the context of initiating the process of economic reforms, radical
changes have been made in the licensing system, in the mechanism
governing import and export, in the foreign exchange regulations and
procedures besides removing all irritants and stumbling blocks to the
production system. Hence, it is imperative to bring about corresponding
changes in the labour laws.
At present, labour laws are targeted towards the organized labour
force. The un-organized sector does not get much benefit out of the existing
labour laws. Particularly, vulnerable groups among the unorganized sector are
urban informal sector, agricultural labour, migrant labour, women and child
labour and poor landless workers, etc. One of the laws which is widely
applicable to these vulnerable groups relates to
minimum wages. The
minimum wages have been fixed at different level by the different State
Governments. If properly enforced, minimum wages are expected to offer
greater potential for income transfers.
However it must be ensured that in
implementation, there is no harassment.

8.3 Employment & Labour Welfare

357

It is necessary to ensure that, in the changed economic scenario,

when displacement of labour takes place or certain number of existing labour
force is expected to get retrenched, the workers are not affected adversely.
Steps need to be taken so that labour is cushioned against such adverse
impact of the reform process. With this in mind the National Renewal Fund
was created out of which payments are made to the workers who are
voluntarily retiring and funds are also provided for re-training and redeployment of the retrenched workers.
Further, a large number of those employed get wages that do not
provide them an acceptable minimum level of standards of living. The
attempts at providing social security are targeted at the poor through special
employment generation programmes on the one hand and provision of free or
heavily subsidized basic needs, like health, nutrition, housing and education
on the other. Health aspect is very important for an average worker who is
poor and cannot sustain himself unless work is available. Unless he is fit, his
earnings get directly affected. The agricultural labour which constitutes
majority of work force, is exposed to many potential risks at the work location
and there is a large number of cases of accidents at work in the field. The
health, hygiene and industrial safety set up, which have so far remained
confined mainly to manufacturing sector should allocate a substantial part of
its resources to providing services to agricultural sector. However, any
scheme that has to benefit the working population in the unorganized sector
has to be at the same time employer-friendly and must be insulated against
implementational distortions.
Labour Reforms - Recommendations of Second Labour Commission
In the context of globalisation, the State should have a firm vision to
'change' which should encompass the Government, industry and the
workforce. Hence, there is no alternative to labour reforms (to rationalise
labour laws in the country and set new directions for employers as well as
employees). The Second Labour Commission has in its report recommended
among other things, steps to check multiplicity of trade unions, reduction in
the number of holidays and permitted employers to lay-off and retrench
without prior permission in establishments of any employment size. It also
sought a comprehensive legislation relating to working conditions as work
places and another for the un-organised sector, besides asking the Centre to
notify a national floor level minimum wage, giving the State Governments
powers to fix the minimum wage which should not be below the National level.

8.3 Employment & Labour Welfare

358

Important recommendations of Second Labour Commission

No prior permission necessary for lay-off, retrenchment in

establishment of any employment size.

No need for any wage board, statutory or otherwise, for fixing wage
rates for workers in any industry.

Restricting holidays to three National holidays and two more,

besides ten restrictricted once a year.

Contract labour shall not be engaged for core production / services

activities. However, for sporadic seasonal demand the employer
may engage temporary labour for core production / service activity.

The "single negotiating agent" should be that trade Union which has
a minimum membership of 66 percent.

Setting up a grievance redressal committee for organisations

employing 20 or more persons.

Evolving a policy framework and enactment of law for un-organised

sector workers to ensure generation and protection of jobs,
protection against poverty, lack of organisation, arbitrary dismissals
and denial of minimum wages.

Creation of higher-power National Social security

preferably under the chairmanship of the Prime Minister.

Enact an "indicative law " on child labour to replace the existing

child labour (regulation and prohibition) Act.

Appoint an expert committee to study the pros and cons of the

National minimum wage and make suitable recommendations for
fixation of minimum wage.

Deduct three days salary for a day's illegal strike

Management has to pay up in the same ratio if it declares illegal

lock-outs.

Employers settle workers' dues before retrenchment (or) closure of

a unit

The purview of the EPF scheme would be enlarged to provide

housing for employees.

authority

Many labour laws enacted long ago are not in tune with the spirit of
liberalisation. Restrictive labour laws discourage employment generation and
are often counter-productive. There is a need to examine various restrictive
measures under labour laws. Industry associations have advocated for
amending Industrial Disputes Act to limit the applicability of Chapter V-B to
industries employing 250 or more workers, as against 100 workers at
present and the condition for prior Government permission for retrenchment

8.3 Employment & Labour Welfare

359

under Section 25-N need to be waived in cases where substantially higher

financial payment is made to retrenched workers.
Employment Services
The employment services came into existence in the country under the
stress of post-war de-mobilisation-resettling of the demobilized service
personnel in civilian employment. The service was later on transferred from
the Centre to the States. The employment service set-up under the
Government comprises Employment Exchanges which register the job
seekers and use this information for two purposes - (i) to send the names of
the job seekers to the organizations where the jobs arise and (ii) to present
the data on job seekers and job placements as employment market
information. Promotion of self-employment is also achieved by providing
information on the opportunities available. Registration of some special
groups of job seekers like physically handicapped, professionals and
executives etc., are also attended to.
The legislation on compulsory notifications of vacancies enacted in
1959 sought to bring the information on private sector job demands into the
employment exchange information system. The function of identifying the job
seekers has been assumed now primarily by the organizations where the job
arise. The private sector does not, practically, use the employment services
provided by the Government. The Government now reach the job seekers
directly when the sizable job demand arises. The number of jobs that arise in
the Public sector has reduced sharply with the re-orientation of the role of
economic planning. Within the public sector, including the Government
administration, the role of employment exchanges in personnel selection has,
therefore, diminished considerably.
At present, the number of employment exchanges in the State is 29.
Apart from this, there are another 15 employment offices for categories like
professionals and executives, technical personnel, unskilled, physically
handicapped, conduct of coaching and guidance center for SCs and STs. etc.
The aggregate number of job seekers in the Live Registers as on 31st
December 1996 was 35.80 lakhs. It rose to 46.70 lakhs by December 2000.
Approximately 65% on the Live Register represents educated category
(Matriculates and above). Women candidates account for about 35%.
The placement made during 1990 was 0.43 lakhs. It has come down to
0.15 lakhs in 2000. The reason for declining trend in placement to recruitment
in the State Government offices is particularly due to the ban on creation of
posts of Steno typist, Typist, Junior Assistants, Office Assistants etc. The
number of employers using the services of Employment Exchanges had gone
down from 6,009 during 2000 to 5,513 during 2001. The number of
beneficiaries assisted under self employment promotion rose from 515 during
2000-2001 to 728 during 2001-2002. Similarly, Vocational guidance provided
during the period also increased from 25,591 to 31,352. Computerisation of
the operation of the Employment Exchanges was taken up in a phased
manner. So far, 29 Employment Exchanges have been computerized. Apart
from this, schemes under TSP and SCP are also implemented for the benefit
of the Tribal and Scheduled Castes.

360

8.3 Employment & Labour Welfare

Presently, as the employment services are mainly tailored to cater to

the needs of job seekers, the requirement of employer is not so much looked
after. The employment service must get re-oriented so as to provide quick
and good quality service to the employer as well as employment seekers.
The educational and training needs for entry in emerging establishments of
private sectors having large employment potential must be identified.
Employment services should also cater to the needs of persons seeking to
pursue avenues for self-employment. The gaps which already exist in the
field of Vocational guidance and in terms of computerisation of Employment
Exchanges should be reduced. Employment market information programme
and research in employment potential both from the supply and demand side
needs to be strengthened.
Craftsman Training
The National vocational training system seeks to provide training for
developing the skills for production in those entering the labour force. Two
major resources for such training are the Industrial Training Institutes (ITIs)
and the 25,000 Industrial establishments that take part in the Industrial
training. The State operates the ITIs and the Central Government trains the
Instructors at the Advanced Training Institute. The training is imparted mainly
in the Engineering Trades as a response to the requirements during the
period of rapid expansion of engineering and capital goods industries in the
manufacturing sectors. Some of the existing difficulties in the system of
vocational training are uneven spread of ITIs in different regions, small
coverage out of the total school pass outs and drop outs, trade obsolescence,
lack of training infrastructure, shortage of experienced staff. Training
programmes being standardized on a national level, it lacks the desired
flexibility to meet the regional and local needs. Procedural requirements for
effecting changes are time consuming. Existing instructional packages in
different trades need to be updated and made more effective.
Women constitute a significant part of the workforce. Special attention
is given to the modernization and establishment of Women Industrial Training
Institutes under the World Bank aided Skill Development
Project. The
employment exchanges take special care to cater to the job needs of women
who have registered with them.
Proper training being an essential input for improving labour
productivity, a comprehensive view of the training facilities across all types of
trades deployed in the production of goods and services needs to be taken by
one agency. It is only through such an exercise that an appropriate choice in
the distribution of public resources between academic education and training
for production activities can be made. This will be attempted in the Tenth
Plan.
If the training needs of all the entrants to the labour force are to be met,
the Government alone cannot deliver the goods. The training cost per seat
has to be reduced and the course content made responsive to the needs of
the local industry. The training Institutes, that generate resources by way of
fees, are better equipped, institutionally, to respond to the needs of the
Industry.

8.3 Employment & Labour Welfare

361

The existing vocational training system is more supply oriented rather

than demand oriented. It is, thus less responsive to the changing
technological and market requirements. Accurate, timely and sufficient data
with regard to the absorption of trained craftsman and apprentices in different
sectors of economy is largely absent. Without such a data base, the feedback
for making changes in the system at the policy and operational level is not
available and the expected outcome is all the more difficult to anticipate.
At present, there is little linkage between vocational training and
vocational education both at Centre and at the State level. There should be
co-ordination between vocational and vocational training imparted by various
departments, so that the programme designs, curriculum and service provided
are in conformity with each other.
The Craftsman training scheme ensures training of skilled craftsman
with the vast network of Government ITIs established throughout Tamil Nadu.
There are at present 53 Government ITIs imparting training in 36 Engineering
and 15 Non Engineering Trades with a total capacity of 17,200 trainees. Of
these 53 ITIs, 10 ITIs are exclusively meant for women. With a view to
meeting the changing industrial needs, 31 Government ITIs were modernized
under the World Bank Assisted Skill Development Project and the remaining
22 ITIs under the State Funded scheme during the Plan period.
With a view to supplementing the State's effort, the Government have
encouraged private participation in the field of Craftsman training. Under this
scheme, 603 ITIs were started in Tamil Nadu with a seating capacity of
58,805 Trainees. A notable feature is, that of these 603 Private ITIs, 165
ITIs were located in 116 Panchayat Unions with the objective of training rural
people. Besides, there are 281 Industrial schools functioning in the State with
a seating capacity of 27,200 trainees. Apprenticeship training is provided
under the Apprentices Act, 1961, to the ITIs passed out trainees in Industrial
establishments for periods ranging from 6 months to 4 years to expose them
in specific areas of skills in Industries. At present, 14,648 apprentices are
undergoing training in 2,082 establishments in 140 trades.
Review of Ninth Five Year Plan
A sum of Rs. 40 crores was provided for implementing various
schemes contemplated during the IX Five Year Plan period, out of which only
a sum of Rs. 31.36 crores was utilized by various line departments. Apart
from the Plan schemes, several schemes were also taken up and
implemented by the line departments under the non-plan head of account.
The details of Ninth Plan expenditure are furnished below.

8.3 Employment & Labour Welfare

362

Table 5
Ninth Five Year Plan expenditure
Name of the Department

Ninth Five Year Plan

(Rs. in crores)
Outlay

Expenditure

Labour Department

14.27

2.56

Chief Inspector of Factories

7.85

0.26

Employment& Training

17.88

28.54

40.00

31.36

Total Labour & Labour

Welfare

Tenth Five-Year Plan (2002-07)

Vision, Objectives and thrust areas
The State Government has decided to pursue an agenda for
development "to provide opportunities for a healthy and productive
life for all " as the ultimate goal. This vision will be realized through
the implementation of the 15 Point Programme, which is the road
map for development during the Tenth Five Year Plan. Among other
things, the 15 Point Programme provides for Livelihood Security "Work for all and transition from unskilled to skilled work, integrated
attention to rural on-farm and non-farm employment as well as to
micro enterprises supported by micro credit; a new deal to the selfemployed through technology, training, techno-infrastructure and
domestic and external trade".
Labour Welfare
In the wake of the Government Policy of liberalization, the country is
undergoing change in economic, social, political, cultural and more
importantly industrial development. Therefore, conceptualization of
Government strategy and revised thrust in the development plan is essential.
While the Ninth Plan served as a launch pad and has brought us into the new
millennium, the Tenth Five Year Plan is to be looked at as a document
implying consolidation of goals made through earlier plans and realization of
the above goals. Hence, the Tenth Five Year Plan is being prepared with the
objective of giving shape to such strategies.
It is evident that labour policy in the country has been evolving in
response to the requirements of planned economic development and social
justice and has a two fold objective viz., maintaining industrial peace and
promoting the welfare of labour. From the IX Five Year Plan period the labour
policy of Government has shifted its thrust area to the workers in the unorganized sector which constitute the majority of the work force and play a
major role in the economic development.

8.3 Employment & Labour Welfare

363

To maintain the tempo of rapid industrialization, technological upgradation and rapid economic growth, it is imperative that an harmonious
industrial atmosphere is maintained for achieving the twin objectives of growth
and prosperity. It is essential to take a fresh look at the structure of labour
laws. The labour laws that have been written some fifty years ago may have
to be re-drafted keeping in view the present scenario. The laws at present are
considered too rigid and while some of these are too comprehensively
restrictive on the one hand, these also lack adequate powers and scope for
timely redressal of clear misuse on the other. The new system must combine
concern for workers welfare and interest, with total elimination of
harassment to the employer and hindrances to development and growth.
Therefore, a more innovative and broad based social security systems for
workers is needed to smoothen the process of labour reforms and enable
rationalisation of labour laws. In the context of liberalisation and consequent
free flow of market forces there is urgent need for review of the various labour
laws. From a climate of suspicion and distrust, the endeavour should be to
move to a system of trust, voluntary disclosures and deterrent and prompt
penalties for violation. The number of inspections have to be curtailed and a
new voluntary assessment system has to be introduced with strengthened
monitoring mechanisms and stiffer penalties. Private Institutions/ NGOs may
also have to be identified
for partnership with Government in their
implementation, especially in areas like Certification etc.
It will be necessary to (a) identify the laws which are no longer needed
and repeal them;
(b) identify the laws which are in harmony with the climate of economic
liberalization and hence need no change;
(c) amend the laws which require changes;
(d) revise the rules and regulations, orders and notifications etc., in tune with
the changed scenario and improve their effectiveness with the objective that
fewer labour laws could serve the entire workforce more effectively. In short,
the emphasis must be on pragmatism and public friendly interaction that
would reduce the scope for dilutions at the implementational level. This calls
for an overhauling of the system to correspond with the legislative changes.
In the context of liberalisation, there is bound to be some amount of
retrenchment of labour or down sizing. Effective steps need to be taken to
retrain/ upgrade the skills of the labour retrenched so that the retrenched
labour is absorbed in some other job/ work. They must also have the
advantage of safety net. Therefore, effective social security mechanism need
to be designed with 'shared risk' for the benefit of the labour.
The welfare boards constituted for the welfare of the workers in the unorganized sectors need to be strengthened on the lines of the one constituted
for the welfare of the organized sector. On the Welfare Board, for the unorganized sector, there is a need to explore the possibility of involving private
Insurance companies by paying a part of premium amount along with the
workers which will pave way for substantial savings on the revenue account.
It is also necessary to promote manufacturing sector and service sector
which has got more employment potential in the context of prevailing large
scale educated unemployment in the State.

364

8.3 Employment & Labour Welfare

In the case of child labour, the policies and programmes initiated during
the previous plans will have to be continued in a more focussed and holistic
manner apart from the universalisation of primary education thereby reducing
the occurrence of child labour. This should also be supplemented by areabased methodology for pre- vocational education to all students before they
attain 14 years of age.
Under the Bonded Labour System (Abolition) Act, 1976 identification
and release and rehabilitation of freed bonded labour is the direct
responsibility of the State Government concerned. The task of identification,
release and rehabilitation of the freed bonded labourers has to be
simultaneous. The PRIs would need to be actively involved in rehabilitation
efforts.
In the case of migrant workers, multi dimensional approach needs to
be adopted to implement various employment generation rural development
programmes, promotion of infrastructure facilities, land reforms,
universalisation of education etc., to arrest the rural /urban migration.
In the case of construction and other workers, a
generation among them would be facilitated regarding
rights and provisions made in various labour laws and
welfare apart from skill upgradation of the workers
productivity and thereby their income.

strong awareness
their protection of
schemes for their
to enhance their

In the case of factories, the inspection mechanism would be

streamlined so that random checking of factories and establishment are
resorted to and severe penalties imposed instead of periodical frequent
checking and imposing meager penalties. With regard to the health and
safety of industrial workers, including women, effective assistance is
necessary to create a safe working environment apart from creating
awareness among the workers and managements. A single window system
has to be created for the benefit of entrepreneurs who proposes to set up
factories. This step will help to save lot of time and paper work.
The restrictive labour laws need to be reviewed and changed without
compromising on the need to pay labour a fair wage and to protect them
against exploitation. A study done by the industrial guidance Bureau of the
State Government reveals that there are 51 monthly / quarterly/ annual
returns to be filed by the industrialists under 45 different labour laws / Rules.
This results in considerable amount of paper work on the part of industrialists
and failure to furnish returns on time attract penalties. The Guidance Bureau
formulated a draft version of combined annual return which was discussed
and finalised in consultation with the Labour Department and Chief Inspector
of Factories.
Employment Services
With a view to enhancing the utility of employment service set up, it is
proposed, to take up this service closer to the people with the help of the
available infrastructure facilities. The approach of Employment Exchanges
towards the job seekers have to be changed, as there may not be the past
level of growth in the recruitment in the Government and Public Sector.

8.3 Employment & Labour Welfare

365

Instead of the traditional job of registration and placement activities for the
organized sector, the role of employment services must be extended to pay
greater attention to compilation and dissemination of labour market
information, particularly the employment generation in the private sector,
employment promotion, vocational guidance, self-employment counseling
etc.
Regular flow of data in respect of employment in the formal sector of
the economy needs
to be generated
by
strengthening the EMI
programme, apart from taking up area specific studies, to assess the
manpower needs of both the organized and informal sector at district level.
Craftsmen Training
In the context of liberalization, the structure of employment has been
undergoing a change. There is a shift towards service sector that is largely
evident. For many of the large service sectors, such as transport,
communication and construction, much of the training skills are acquired on
job. The training wing has to extend its area of operation beyond engineering,
into the services sectors so as to cater to the present day needs. The syllabi
of Industrial Training Institutes have to be re-written keeping in view the
present marketability. Vertical mobility have also to be provided for the
students of Industrial Training Institutes, so that they may join in the
Polytechnics.
Tenth Five year Plan Proposals
In Tamil Nadu there are three departments which are engaged in the
implementation of the programmes contemplated under the sectoral head Labour Welfare, Employment Services and Craftsmen Training. They are
the Commissioner of Labour, the Chief Inspector of Factories and the
Director of Employment & Training.
I. Labour Department
The main functions of Labour Department are settlement of industrial
disputes, enforcement of various labour laws and the administration of welfare
schemes for the workers.
Another area of operation is in consumer
protection by enforcing the Weights and Measures Act. A Labour Welfare
Board for the welfare of workers in the organized sector apart from the ten
Labour Welfare Boards constituted for the unorganized workers are also
functioning under their control. Keeping in view the objectives and thrust
areas identified, schemes have been formulated and included in the Tenth
Five Year Plan. The total cost of the schemes / programmes included
amounts to Rs. 10.58 crores for implementation. The details are given in the
Table below.

366

8.3 Employment & Labour Welfare

Table - 6
Labour Department - Tenth Five Year Plan schemes
(Rs. in crores)
Sl.
No.

Name of the Scheme

Outlay

1.

Construction of Centralised Office Building

0.78

2.

Scheme for promotion of welfare of working class, Organised and

Unorganised. (Creation of Joint Commissioner of Labour at
Trichy)
Strengthen the Information System for the Conciliation Machinery.
Strengthening of Weights & Measures Enforcement Machinery
a) Creation of Enforcement wing for the Net Content Checking at
Factory Premises (as suggested by Government of India,
Ministry of Civil Supplies) with 9 posts of Inspectors of Labour
with supporting staff for seven regions.
b) Strengthening of Enforcement with regard to verification of
Weighbridges by providing testing kits with supporting staff.
c) Verification of Clinical Thermometers, Water Meters and Auto
Meters
d) Strengthening of Weights & Measures Machinery with
supporting staff (Squad)
e) Formation of Consumer Protection Cell
f) Strengthening of Working Standard
Laboratories in the State.
A Lumpsum Grant for Strengthening of Labour Department
Total - Labour Department

0.18

3.
4.

5.

2.32
2.50

0.25
0.40
0.30
0.32
3.03
0.50
10.58

II. Chief Inspector of Factories

The Inspectorate of Factories is enforcing the Tamil Nadu Factories
Act, 1948 and the Tamil Nadu Factories Rules, 1950. Besides, there are 13
other Acts being implemented by the Inspectorate. The functions of this
Inspectorate could be classified under two major heads namely, Regulatory
and Promotion of Health, Safety and Training including development
functions. The task of elimination of child labour in hazardous industries and
regulating the child labour in non-hazardous industries, management of
welfare funds for the welfare of match and fire workers, ensuring the
occupational health and industrial safety of the workers, enforcement of Acts
meant for the welfare of women workers etc., are some of the activities
undertaken by this Inspectorate. Taking into account the objectives and the
thrust areas identified, schemes / programmes costing Rs. 4.96 crores have
been formulated and included for implementation during the Tenth Five Year
Plan. The details of the schemes are given in the Table below.

8.3 Employment & Labour Welfare

367

Table - 7
Inspector of Factories - Tenth Five-Year Plan Schemes
(Rs. in crores)
SL.
No.
1

4
5
6

Name of the Scheme

Enforcement of Factories Act
Strengthening of Factories Inspectorate
1. Strengthening of Regulatory Wing with one post
of Joint Chief Inspector of Factories with
supporting staff at Trichy.
2. Scheme for purchase of 9 new vehicles against
condemned vehicles.
Occupational Health
1. Modernising the existing Industrial Hygiene Lab
2. Formation of Special Technical Cell with
Inspector from Chemical Engineering discipline
Industrial Safety
Formation of one Training Centre at Chennai to
educate workers employed in hazardous factories.
Infrastructure Facilities
Construction of centralised office building
Modernisation of Inspectorate of Factories
Lumpsum grant for Strengthening of Factory
Inspectorate
Total Chief Inspector of Factories

Outlay

0.22

0.36

0.19
0.11

0.19

3.00
0.40
0.49
4.96

III. Director of Employment & Training

The Employment & Training Department attends to the work of
registration and placement of candidates for employment, collects and
disseminates EMI and provides vocational guidance and disseminates
occupational information to the registrants and students. Apart from this,
under the craftsman training conducted by the Department, the ITIs and
Apprenticeship training programme help the State in producing the required
skilled technicians and craftsmen. These Craftsmen trained out of the ITIs
form the backbone of Industry in its production process. Keeping in view the
objectives and thrust areas and in line with the modern technical know- how,
schemes have been formulated and included in the Tenth Five Year Plan.
The cost of the programmes / schemes included amounts to Rs. 25.21
crores. The amount proposed for the Employment Services is Rs. 4.04
crores and the amount proposed for Craftsmen Training is Rs. 21.17 crores.
The details are given below.

8.3 Employment & Labour Welfare

368

Table - 8
Employment Services Tenth Five Year Plan Schemes
(Rs. in crores)
SL.
No.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11
12.

Name of the Scheme

Computerisation of Employment Exchanges
Upgradation of Computer
Systems in Employment
Exchanges
Job Portal
Area Skill Surveys for 30 Districts (6)Districts by Plan Year)
Electronic Telephone Exchange Board
Computer System for C.Ms Cell Petition
Velaivaipu Seidhi
Vehicles for R.D.D, Trichy, and Joint Director, Chennai
Wide Area Net Work
Purchase of Xerox and Fax machines for RDD's Office
Own Building for Employment Exchanges
Enforcement Cells to implement the C.N.V Act in 3 Districts
Total Employment Wing

Outlay
0.26
0.35
0.08
0.96
0.02
0.03
0.01
0.07
0.11
0.08
2.00
0.07
4.04

8.3 Employment & Labour Welfare

369

Craftsmens Training Schemes proposed for the Tenth Five Year Plan
(Rs. in crores)
Sl.
No

Name of the Scheme

Outlay

Introduction of new trades in 25 Industrial Training Institutes by

diversification of trades at the rate of 5 ITIs in a year
Construction of own building to Government ITIs., Needamangalam,
Cuddalore
(Women),
Dindigul
(Women),
Thiruvanmiyur,
Thirukuvalai, Nagercoil (Women)
Construction of dust proof Room in 10 Government ITIs.

2.00

3
4

4.81

0.45

Construction of own building for office of the Regional Joint Director

(Training), Coimbatore, Madurai, Trichy and Tirunelveli.
Construction of own building to 9 Related Instruction Centres

0.80

Construction of pucca building with R.C.C. roof for stores in 20

Government Industrial Training Institutes
Construction of compound wall for 6 Women Industrial Training
Institutes at Salem, Madurai, Coimbatore, Pullambadi, Tiruppur and
Ambattur
Construction of additional class rooms in 20 Government Industrial
Training Institutes with furniture
Provision of computers with accessories to all offices with internet

1.40

10

Construction of Hostel for 7 Government Industrial Training Institutes

in Pudukottai, Ramanathapuram, Dharmapuri, Coimbatore
(Women), Madurai (Women), Salem (Women) and Tiruvannamalai.

2.45

11

Construction of sump with overhead tank for drinking water at

Industrial Training Institute, Pettai.
Construction of Cycle/Two Wheeler stand for 53 Government
Industrial Training Institutes
Compound wall for 10 Government Industrial Training Institutes

0.01

5
6
7

8
9

12
13
14
15

Provision of barbed wire fencing for Government Industrial Training

Institute, Chengalpet
Provision of Chain link fencing for computer Block at Industrial
Training Institute, Salem
Total- Craftsmen Training

3.15

0.60

1.35
2.04

0.53
1.50
0.07
0.01
21.17

Tenth Five Year Plan Outlay (2002 07)

The total Tenth Five Year Play outlay proposed for the Labour, Labour
Welfare, Employment Services and Training Sector is Rs. 40.75 crores. The
Department wise details are given below.
Tenth Five Year Plan Outlay
Labour and Labour Welfare, Employment Services & Training
(Rs. in crores)
Sl.No.
Name of the Department Head
Outlay
I.
Commissioner of Labour
10.58
II.
Chief Inspector of Factories
4.96
III.
Director of Employment & Training
Employment Services
4.04
25.21
Craftsmen Training
21.17
Total - Labour and Labour Welfare, Employment
40.75
Services & Training