[Answered] Explain the challenges associated with the policy of job quota for locals in the private sector. What is the rationale behind the implementation of job quota for locals in the private sector?

Recently Punjab and Haryana High Court stayed the Haryana government’s law guaranteeing 75% reservation to locals in private sector jobs. Similar laws have been passed by states like Andhra Pradesh, Jharkhand, Maharashtra, Karnataka and Madhya Pradesh guaranteeing reservation to local population in private jobs. 

The rationale provided for creation of these reservation policies 

• The objective of such policies is to empower the local youth by giving them employment. 
• It discourages migration and raises morale of the local population, especially in view of agrarian crisis and local unrest because of increased unemployment. 
• There is a need for such policies to create substantial equality as the proportion of public sector jobs is very low in the overall number of jobs. 
• The states have a legitimate right to ask private sectors to adhere to the reservation policy as the private sector utilizes public resources like infrastructure.  
• These policies are in line with global practices where countries like US, (The US Civil Rights Act of 1964) and Canada (The Employment Equity Act), provide reservation in private jobs. 
• The Constitution of India does not explicitly prohibit reservation in private jobs based on residence or domicile under Article 16. 

There are several challenges associated with the policy of job quota for locals in the private sector. 

• Legal challenges in the execution of these policies 

• • Goes against the constitutional ideal of equality, particularly Article 14 and 16. 
  • Beyond the power of states to create domicile as a condition for employment as the constitution provides this provision for public employment and only parliament is empowered to make such laws under Article 16(3).  
  • Goes against Article 19(1)(g), which provides the right to practice any profession, or to carry on any occupation, trade, or business to every citizen. 
  • Goes beyond the reservation ceiling of 50%. 

• Hampers unity in diversity, can create the situation of local vs Non local which is a threat to unity and integration of the country. 
• Hampers the merit system in the economy, which can have implication for efficiency in the economy. 
• It could create practical problems like availability of qualified and skilled workforce in the states, which could create implications for economic development. 
• It might discourage future capital investment in the region, because of constraints created by the policy. 
• It may eventually lead to a flight of existing investment that will result in loss of employment and economic growth. 

• It creates a roadblock for the labour law reforms that the Union government is pursuing to create ease of doing business.  
• These policies give priority to vote bank politics over sound economic policies that give short term benefits while creating long term problems.  
• It goes against the stand of India at international level where India has protested such protectionist policies by countries. 

The local reservation policy may provide some short-term benefits but in the medium and long term it may hurt the economic development of the state unity of the country. 

Hence to achieve the intended benefits of these policies the states shall go for capacity building of local population through skill development etc. and providing incentives to the private sector for hiring local youth.