After Haryana, all states rush to follow suit; reservations and quotas for jobs are becoming a trend

It seems that the fears of industry experts, economists and legal experts about the ramifications of the new reservation quotas for jobs are finally coming true. Other Indian states have decided to follow Haryana’s example and implement similar laws of their own. After the Haryana employment bill, Jharkhand came up with an employment policy of a 75 per cent job quota reservation. And now Uttar Pradesh wants to reserve 40 per cent of the jobs in the Greater Noida industries.

Inside article2-States rush to follow the suit; Reserving job with quotes is becoming a trend

At a time when industries are still recovering from a tough year, there is a sudden wave to legislate job reservations for local residents. Various states are approving employment policies for job quotas in the private sector. First it was the Haryana government, which brought in the ‘Haryana State Employment of Local Candidates Bill 2020’ to provide 75 per cent job reservation for domicile certificate holders.  

Then merely a fortnight later, the Jharkhand government also announced a similar employment policy of the allocation of a 75 per cent job quota. However, unlike Haryana, Jharkhand kept the cut off for salaries at up to Rs 30,000 per month for local candidates. The decision is yet to be officially announced during the ongoing budget session of the Jharkhand government. Apparently, the decision was taken due to the reverse  migration of youths during the lockdowns. Another reason being cited for this step is the drastic drop in the state’s unemployment rate which fell to 11.3 per cent in January 2021 after rising up to 59.2 per cent at the peak of the Covid-19 pandemic in May 2020. In January 2020, the unemployment rate was 10.6 per cent. 

States such as Andhra Pradesh, Karnataka, Telangana, Maharashtra, Madhya Pradesh, Gujarat and Rajasthan have either approved, drafted or are in the process of drafting similar policies.  

Now, the Uttar Pradesh government has also jumped on the bandwagon.  

Banking on employment generation, the UP government via the Greater Noida Industrial Development Authority has issued a circular which proposes changes in the employment criteria for the industries there. The circular states that there must be more than or equal to 40 per cent employment of local people in these industries.  

Inside article1-States rush to follow the suit; Reserving job with quotes is becoming a trend

Largely, these policy decisions of reserving jobs are being criticized through various channels and on different platforms. As it is the small businesses that are going to bear the brunt of the negative consequences arising from these new quotas, whether they are in Haryana or in Uttar Pradesh. Experts are majorly questioning the intent behind these policies and are sounding the warning bell about the debilitating effects they will have on the economy.

With regards to Haryana, FICCI called it a spell of disaster for industrial development and private investment in the state. “Investors and entrepreneurs need to source the best human resources available in the country to be competitive and successful. To force them in such a regressive straight jacket will force them to look beyond Haryana and this will hurt the interests of the state,” said FICCI President Uday Shankar in a statement.

Similarly, the auto industry, which has a huge investment of over Rs 400 billion in the state has been continuously demanding a reconsideration of the bill. The Automotive Component Manufacturers Association of India (ACMA) says, “Such a move would not only adversely impact the ‘ease of doing business’ in the state, but also be detrimental to Haryana’s image of an industry friendly destination.”

On the same note, the retailers’ apex body, Retailer Association of India has appealed for a withdrawal of the notification as this move might force retailers to shift their operations elsewhere.

Following suit

The notification by the Greater Noida Authority comes at a time when different states are reserving jobs in the private sector for assorted reasons.

The Chief Economist and Executive Director—Research & REIS at JLL talks to us on this matter. According to him India does not need job reservation, “I have observed that a bunch of states are following suit and applying this strategy of allocating job quotas for various reasons. It can either be a political imperative or some other reason, but I do not believe that reserving jobs for certain categories of people will really help. If you look at India as a whole, it is one economy. If the government really wants to better the economic prospects of these sectors, a capable and talented workforce should be hired for jobs. This will make the economy more efficient.”

Even if the circular is issued for one district, the industry’s overall response to this decision is either negative or lukewarm. Industry owners readily admit that they can be okay with the decision if certain conditions are met.

BR Bhati, Divisional Chairman of the Indian Industries Association of the Greater Noida chapter spoke to us, “I am not saying that local people are not talented. If they are skilled, industries will definitely hire them. In fact, most industries have local employees working for them. But industries require a certain set of skills in an employee and if we do not get the right talent, what will happen on the work floors? I am a local businessman; I have had my fair share of dealings with local workers and employees. And mind it, it was not a great experience. I would say it was rather bitter. So, I am not sure of this announcement. My question to the government is, can they provide guarantees to entrepreneurs in case the implementation of this policy backfires? Who will be responsible for the damages in case we do not get enough workforce? If the government is keen to implement such policies, they should at least provide us with a gaurantee.”

Currently, Noida is a major contributor to UP’s economy. The district ranks first among all districts of Uttar Pradesh and accounts for 10.12 per cent of the state’s GDP, despite registering a slight drop of 0.17 per cent since 2017-18. Meanwhile, Greater Noida is the hub of some of the major manufacturers such as LG, Honda, Daewoo, Oppo, Vivo etc., where a mixed ratio of workers including local employees, are already working.

“We are here to give jobs, but various states reserving jobs is not a conducive step in my opinion. Overall, it will have a negative effect on the economy, wherever it is implemented. It may lead to entrepreneurs avoiding setting up industries in the state. For instance, corporate call centres are planning to move to Uttar Pradesh from Haryana,” says Bhati.

Inside article2-States rush to follow the suit; Reserving job with quotes is becoming a trend

Vocal for local

Last year was unprecedented for businesses irrespective of the sectors. Due to the lockdowns and shutdowns of industries there was a mass exodus of the labour community to their native places. This highlighted the necessity for a certain portion of the local workforce to be employed in these industries, just to keep the operations going if such conditions arise again.

Speaking to us Visharad Gautam, Chapter Chairman at IIA Greater Noida says, “During the pandemic, industrial sectors suffered heavily due to workforce migration as there was a lockdown. But it came with a realization that a certain ratio of the local workforce is also necessary.”

According to him, local people take less leave compared to an employee from some other place or state. And this is an advantage that local workers have over a migrant worker when it comes to working for their industries.

Talking about the 40 per cent reservation, he comments, “I believe, industries are ready to hire local workers. But in my opinion people are not ready as far as their skills are concerned. They do not possess the technical know-how.”

According to Gautam, before passing the bill, the government should have made some arrangements to inculcate training in the local workforce and worked towards their skill amelioration. “Greater Noida is the hub for several industries. If the government wanted to implement a 40 per cent quota system, they should have first started by training people for work in these industries, that too if they are interested. We are ready to hire a skilled workforce with open arms.”

He also emphasizes the basic etiquette, training and other communication skills that are required according to the industry protocol. Citing the example of the training programme of Kailash Hospital, a giant in the healthcare sector, he says, “Every MSME can’t compete with bigger enterprises and run their own training programmes. That is why I feel that the government should provide us with some training infrastructure first and then it should talk about reserving jobs.”

On this Bhati asserts, “Every MSME is a trainer. Fresh people come to our industry and we train them for one or two years. And then they can be consumed permanently in the unit. But it is a fact that we cannot stop talent from moving elsewhere and stop them from earning. After a certain period, they move out, looking for better salary options. For this particular issue, we have raised concerns as we are unofficial trainers. One solution is that MSMEs should be authorised to give out training certificates. At least we should be recognised. Or the government should use a third party for skill upgradation.”

On the other hand, the circular does not define the term ‘local.’ So, a big question is who is a local?

The majority of people residing in Noida and Greater Noida belong to other states and play a crucial role in keeping the economy running. There are also people who have settled here. In addition to this, there are those people who are living on rent. So, will they be considered locals too? These are some of the questions that can create further confusion.

Gautam explains who a local person actually is as mentioned in the circular. He says, “In my understanding, those people who are Indigenous inhabitants or whose lands were acquired by the government for building city infrastructure, are local people. And they will be given jobs under this reservation policy. But there is a catch here,” he says.

According to him, most of the local people, after the development of the city, have become quite prosperous and do not prefer doing jobs. They would rather conduct and manage their own businesses.

It is a free market

It seems that the Indian states are competing with each other and rushing to announce such policies, which in the long run will impact the market, the industries and most of all the sentiments of the people.

Das questions the intent of such decisions. He asks, “What are the governments trying to do? Will these policies really improve the employment and economic conditions of any state?”

According to him it is an injustice to those people who are getting education and vocational training to enhance their skills to work in the various industries. “If you try to reserve jobs for people without understanding the efficiency or calibre of a skilled workforce then it’s a mistake. Just because of the quota system you have to recruit people, whether they are ready or not. I think it’s not justifiable for the different sectors, especially the organised sectors.”

Calling it an unnecessary intervention, Bhati also questions this policy, “If a person is capable, talented and skilled, how does it matter if he or she is local or not? I ask, what is the real reason behind giving the reservation? Let it be a free market. There should be no reservation and this way, both the entrepreneur and the workers will benefit.”

Das also advocates that it is a free market, and the market should decide whom to hire for work based on their skillset. “It will cause a big upheaval in the economic landscape. If all the states start to reserve jobs like this, it will create more confusion in the market and hence, harm the local economy. In many instances, I have witnessed that the local people are not good enough for certain jobs, including those in the real estate sector such as construction. The reason can be that they are either not interested or skilled enough for the job. On other hand, industry chose to work with the migrant populace because they have emigrated here with the sole purpose of working and earning money and thus do a better job.”

Meanwhile, in India’s ecosystem, the inequitable distribution of opportunities in our society still prevails. If the government really wants to mitigate this situation and bring about positive changes on various fronts, then reservations should be given in education for those who are underprivileged. This should be done to a certain limit such as reservations in the arenas of primary and secondary education. According to Das, this is a better solution then allocating job quotas. “Provide education at the primary and secondary level. Beyond that, it is a free market. The market will decide who will get admission or who will get a job. These are the times where we are witnessing more privatization and corporatization, where the ultimate goal is to improve efficiency.”

Overall, from industry and legal experts to local business owners, all are unanimously opposed to the policy of reservation of jobs in the private sector. Association bodies are continuously demanding that the policies around employment should be reconsidered and reassessed. The government on its part should also follow a balanced approach to maintain peace, while not appearing to favour localism.