Explained: Haryana Government’s Law To Reserve 75 Per Cent Jobs In Private Sector For Locals, Will It Help?

On Tuesday (2 March), Haryana governor Satydeo Narain Arya gave assent to the bill providing 75 per cent reservation in private sector to job seekers who have a state domicile certificate.

The quota for local people will apply for 10 years to private sector jobs that offer a salary of less than Rs 50,000 a month.

The act states that the quota applies to all the Companies, Societies, Trusts, Limited Liability Partnership firms, Partnership Firm and any person employing ten or more persons and an entity as may be notified by the Government of Haryana.

Reportedly, the domicile status applies to those who are born in the state or living there for at least 15 years.

“The governor today gave his assent to the Haryana State Employment of Local Candidates Bill, 2020, providing quota for local people in private sector jobs that offer a salary of less than Rs 50,000 a month,” chief minister Manohar Lal Khattar was quoted as saying by HT.

The demand for the above law was championed by deputy chief minister Dushyant Chautala’s Jannayak Janta Party (JJP), a partner in the ruling alliance. The reservation for locals in jobs was a key promise made by JJP in the 2019 assembly elections.

Difficult Legal Terrain

The law for reservation for locals has had to charter a difficult terrain, and experts say that there might be more legal hurdles to come.

An ordinance for the purpose was approved by Haryana Cabinet in July 2020 was reserved by the governor for the consideration of the President and ultimately shelved by the government in October 2020.

The union labour and employment ministry which examined the ordinance had advised the state government against enacting such a law.

Reportedly, the law initially didn’t find a lot of takers in Bhartiya Janata Party (BJP), the ruling party at the state and centre. In fact, CM Khattar had once sounded non-committal on the prospect of enacting such a law.

HT quoted sources as saying that the BJP government at the Centre have a very different view on the matter and it was surprising how the governor assented to the bill.

Legal experts say that the bill can face constitutional hurdles.

The clause providing for preference in jobs to the local candidates domiciled in Haryana can be seen as contravening Article 14 of the Constitution that guarantees equality before the law and Article 19 (1)(g) which provides for protection of certain rights to practice any profession, or to carry on any occupation, trade or business.

The Supreme Court has capped the reservation to 50 per cent, and that too in the public sector. It also upheld Allahabad High Court’s quashing of Uttar Pradesh government’s reservation policy when it failed to provide sufficient data.

Section 23 of the law which gave it an overriding effect on other laws - a broad provision having the potential to be repugnant to an Act of the Parliament - was modified by the government to apply to only other state laws.

Will It Work?

In the statement of objects and reasons of the bill, the government states that giving preference to local candidates in low-paid jobs serves the general public interest, and is socially, economically and environmentally desirable.

“The bill will provide tremendous benefits to the private employers directly or indirectly through qualified and trained local work force. Availability of suitable workforce locally would enhance the efficiency of Industry as the workforce is one of the major components for the development of any industrial organisation,’’ it said.

The Haryana government also argues that the law will discourage migrants who have “significant impact” on local infrastructure and lead to “proliferation of slums”.

It is possible that the job loss due to pandemic and subsequent high unemployment rate is what pushed the ruling party to finally pass the bill.

The unemployment data released by CMIE in September 2020 showed that Haryana had the highest unemployment rate in the country at 33.5 per cent.

In April 2019, Haryana had an unemployment rate of 26.5 per cent - the fifth largest in the country - after Puducherry (75.8 per cent), Tamil Nadu (49.8 per cent), Jharkhand (47.1 per cent) and Bihar (46.6 per cent).

However, experts question the benefits of the reservation. They argue that the law may erode competitiveness and harm the post-pandemic recovery. The high costs of training the workforce may even force the companies to relocate.

Experts say that the challenge of unemployment cannot be met with a reservation diktat.

For one, it is important to make difference between ‘jobs’ problem and ‘wages’ problem. Migrants often take up jobs that the locals, given their socio-economic status, are not willing to take.

The highest employment is often found among the least educated at the bottom of the ladder, the people such quotas claim to target.

Also, the perception of outsiders stealing local jobs may not based on facts. For example, data shows that in Gujarat, locals occupy 92 per cent of all jobs in the private sector, even more than the 85 per cent quota promised by the state government.

The law will also be difficult to enforce and put high regulatory burden on the companies as their current systems do not track the origin of the employees. While the law provides that the companies can hire non-locals in case suitable local candidates cannot be found, they still have to go through a long procedure.

It all boils down to the presence of talent with necessary skillset at competitive prices. Labour mobility keeps the labour market competitive, and increases production efficiency.

“The move goes against the basic principle of meritocracy that acts as a foundation for businesses to grow and remain competitive,” Rituparna Chakraborty, cofounder of TeamLease Services, a staffing firm was quoted as saying.

Many other state governments, however, have been mulling reservation for locals in the private sector jobs. The list includes Gujarat, Karnataka, Andhra Pradesh, etc.

The trend of economic populism will do little to address the challenge of providing good education, skills, and decent employment to amidst India’s youth bulge.