The ill effects of Job reservation for locals

Synopsis: Haryana has introduced a new law where it assures 75% Job reservation for locals. This could be a disastrous decision for the Indian Economy.

Introduction

The Governor of Haryana has approved a law that regulates job reservation in the private sector. This could possibly hamper India’s investment climate and its socio-economic framework.

• The Haryana State Employment of Local Candidates Act of 2020 seeks to provide for a 75 per cent job reservation for local people in private-sector jobs. The reservation is ensured on jobs having salaries less than Rs. 50,000 a month.
• Apart from Haryana, States such as Madhya Pradesh, Karnataka, Andhra Pradesh also tried to provide Job reservation for locals.

Few major provisions of Haryana’s Law:

1. Firms and companies need to register all of their employees receiving a gross salary of Rs 50,000 or less on a government portal and update it at regular intervals.
2. An exemption can be claimed by employers when there enough number of local candidates are not available with the desired skills, qualifications, and proficiency. However, an officer of the rank of deputy commissioner or higher will evaluate such a claim.

What are the issues with Job reservation for locals?

1. This law is not consistent with the provisions of the constitution. Especially Article 19(1)(g) and Article 16(2).
   • Article 19 (1)(g): Right to freedom of profession or Right to carry on any occupation, trade or business
   • Article 16(2):  State cannot provide discrimination on grounds only of religion, race, caste, sex, descent, place of birth, residence or any of them. The law imposes difficult and argumentative responsibilities on key personnel of firms in the State.
2. The Law creates barriers for businesses by attaching severe monetary penalties for alleged non-compliance. The penalties can go up to Rs. 2,00,000 rupees.
3. Apart from that, the government will have the power to enter firms’ premises for inspections. This could possibly bring back the ‘Inspector Raj’ system. This process discourages employers from operating in the State. Further, It will lead to decreasing local jobs and increasing the unemployment rate in the long run.
4. Impact on the entire country: The law will be an example for more such laws from State governments. This will lead to a mass departure of investors from India.
   • For instance, a disturbance in the Gurgaon back-office operations of a global firm will damage India’s reputation as a stable, trustworthy investment destination with a talented workforce.
5. The law is completely against the Prime Minister’s vision such as ‘Ek Bharat Shreshtha Bharat’ and ‘One Nation One Market’.

Way forward

• It is time the Centre discourages job reservation for locals. Because these laws threaten to unleash a ‘work visa’ regime for Indians within the country and also damage crucial workplace diversity.