A recent move by some states to reserve jobs in the private sector impinges on corporate’s rights and may hinder attracting best talent
It's the latest in state government announcements. Haryana and Jharkhand have declared 75 per cent job reservation for locals, southern parties DMK (Dravida Munnetra Kazhagam) and MDMK (Marumalarchi Dravida Munnetra Kazhagam) have promised it in their election manifestos for the Tamil Nadu polls, while Uttar Pradesh has already implemented it in Greater Noida. The move understandably has the private sector up in arms. They call it unfair to impose ad hoc government rules on companies that have already invested money, set up business, and are currently operating companies in those states. For the corporates, it's also an additional strain to find the right talent for the job. Most jobs require a certain skill set, and having to stick to only the human resource pool of a particular state for majority of private jobs is a less than optimal for companies looking to attract the best workforce.
The issue of job reservation is not a new one, albeit restricted to government jobs so far. States such as Maharashtra and Gujarat have enacted laws to reserve jobs for people hailing from the states. Constitutionally, states can provide reservation in jobs, educational institutes etc. but can't go beyond 50 per cent reservation without providing adequate reason to do so. However, states have no authority to force reservation in the private sector. Judicial precedence also shows that the issue of reservation can come under judicial review. There are also currently no powers given to states to decide on reservation based on domicile. Therefore, the recent declarations by state governments can be challenged in a constitutional court. Verdicts on the laws passed by their counterparts (Maharashtra, Karnataka, Andhra Pradesh, Madhya Pradesh) to guaranteeing reservation in the private sector to locals, are still awaited in various courts. The private sector can cite breach of its right to trade and move the courts if the laws are strictly implemented.
The other aspect to ponder is the urgent need to provide job reservation in the private sector. India has been witnessing jobless growth in the last few years. The sudden implementation of demonetisation hurt even more and with the debilitating impact of Covid-19 induced lockdowns, the economy suffered resulting in wide scale retrenchment across sectors. India's unemployment rate increased to 9.1 per cent in December 2020, touching a six-month high. The reverse migration of labour post-lockdown is yet to be adequately absorbed by the farm sector. Add to this, the urban unemployment too rose from 7.1 per cent to 8.8 per cent. January 2021 brought in some better tidings with unemployment declining to 6.5 per cent, according to the Centre for Monitoring Indian Economy (CMIE). However, all state governments are still under the hammer to provide employment to jobless masses; propelling their need to enact laws (at least on the face on it) that guarantee work to locals.
There is also the matter of a social fallout to consider, should these laws get ratified. These laws would mean a restriction on the citizens' right to work freely in any state of their choice. The access of skilled labour to favourable jobs will also take a beating. Haryana's decision has set the ball rolling within the startup community that is weighing its options of either shifting base to Delhi or Bengaluru. This is just the tip of the iceberg. The economic and social fallout of coercing companies instead of incentivising them will have a negative impact. And pray tell, what happens to locals of other states who are forced to seek jobs outside their domicile? Will they be deprived of work opportunities not based on merit but because of their place of birth?
The writer is an author and media entrepreneur. Views expressed are personal