Local Reservation in the Private Sector

Context:

● Recently, the Haryana State Employment of Local Candidates Act, 2020 was passed. It provides 75% reservations to local people in private-sector jobs that offer a salary of less than Rs 50,000 a month.

● All the companies, societies, trusts, limited liability partnership firms, partnership firms and any person employing 10 or more persons and an entity, as may be notified by the Haryana government from time to time shall come under the ambit of this Act.

Supreme     Court’s judgement on reserving jobs for locals

The Supreme Court has ruled against reservation based     on place of birth or residence.

Dr     Pradeep Jain v Union of India (1984):    The issue of legislation for “sons of the soil” was discussed in the case.     The court expressed an opinion that such policies would be unconstitutional     but did not expressly rule on it as the case was on different aspects of     the right to equality.

Sunanda     Reddy v State of Andhra Pradesh (1995):    The Supreme Court affirmed the observation in Pradeep Jain to strike down a     state government policy that gave 5% extra weightage to candidates who had     studied with Telugu as the medium of instruction.

In     2002, the Supreme Court invalidated     the appointment of government teachers in Rajasthan in which the state     selection board gave preference to “applicants belonging to the district or     the rural areas of the district concerned”.

In 2019, the Allahabad High Court struck down a recruitment notification by the UP     Subordinate Service Selection Commission which prescribed preference for     women who are “original residents” of the UP alone.

Probable Question:

1. Critically analyse the idea of reserving the job      for locals in the private sector. What are the hurdles and implications of      such a policy?

The argument for reserving jobs for locals:

● Address Rising Unemployment:  According to the Centre for Monitoring Indian Economy (CMIE), Haryana reported the highestunemployment rate of 26.4 per cent in February 2021, while India's unemployment rate is 6.9%.

● Agrarian Distress: The agrarian sector is under tremendous stress across the country, and young people are desperate to move out of the sector. But there is a serious dearth of jobs (private and government).

● As affirmative action in the private sector: The State of Working India 2018 Report has shown that discrimination is one of the reasons for the under-representation of Dalits and Muslims in the corporate sector.

● The state government has advanced two other reasons for such a law: one, to discourage migrant influx seeking low-paid jobs and two, to reduce the proliferation of slums due to the pressure of rising population on existing infrastructure.

Issues with reserving jobs for locals:

● Constitutional hurdles: Article 16 of the Constitution, which guarantees equal treatment under the law in matters of public employment, prohibits the state from discriminating on grounds of place of birth or residence.

● However, Article 16(3) of the Constitution provides an exception by saying that Parliament may make a law “prescribing” a requirement of residence for jobs in a particular state. This power vests solely in the Parliament, not state legislatures.

Economic implication:

● Haryana’s job quotas are more problematic because of the high business investments in particular belts, especially in Gurgaon and Manesar.

● This hits the ideal of one unified Indian market.

● The idea of reservations for locals also goes against the fact that the migration of labour is good for the economy. Many Indian states, Punjab, Gujarat, and Maharashtra, to name a few, have benefited from migrant labour.

● Encouraging capital-intensive industry: Many firms, including especially Micro, Small and Medium Enterprises (MSMEs) may paradoxically, try and switch to capital-intensive techniques despite their liability of smallness, to avoid the burden of such stifling laws that restrict firms and industries from attracting cheap labour.

● Reduce competitive advantage of firms: While such laws may appear to be pro-state, they are against Indian interests, by affecting the competitiveness of the nation’s firms vis-a-vis that of their global competitors in world export markets.

● Affect ease in doing business: Many specialised activities require highly skilled staff that cannot be found locally.

Political Implications:

● The concept of ‘outsiders snatching jobs from locals’ is an easy political sell for electoral advantages.

● Thus, this can lead to greater tribalism among the local population, which goes against the basic tenets of fraternity as envisaged in our constitution.

Way forward:

● In the present COVID situation, unemployment is the highest in the last four decades. The need of the hour is a more inclusive, employment-centred model of growth.

● There is also a need to nurture an education and skilling ecosystem for states which can produce job-ready workers.

● Governments should incentivize the industries for more investments and create an enabling environment for more job creation and industrialization.

● Government should focus on making the youth of a state employable with proper investments in education, health and skill development.

● There is a need to move towards economy based reservation rather than further expansion of reservation policies using unproductive rationales.

● Thus, on efficiency, equity and constitutional grounds, there is no substantial case for job quotas in the private sector.