- GS-2: Issues and challenges pertaining to the federal structure
- GS-2: Parliament and State legislatures—structure, functioning, conduct of business, powers & privileges and issues arising out of these
Haryana Job Quota Law (Local Reservation)
Context: Recently the Haryana government notified a new law that requires 75% of private sector jobs in the state, up to a specified salary slab (under Rs 50,000 per month), reserved for local candidate (born in the state or living there for five years)
- Objective: The legislation, the government argued, is aimed at boosting local employment particularly for the youth in unskilled jobs.
- Applicability of the law: The Haryana State Employment of Local Candidates Act 2020, requires all companies, LLPs, trusts, societies and partnership firms with more than 10 employees to follow these local employment requirements
- Enforcement Power: The law specifically empower the district administrations to enforce the new regulations through inspections with a 24-hour notice.
Criticism of the legislation
- Impractical: The lack of a sufficiently large qualified domestic workforce in Haryana made the implementation of the new act “impractical”.
- Balkanisation of India’s labour market: Such kind of restrictions hampers Prime Minister’s vision of ‘Ek Bharat Shrestha Bharat’ that aims, among other things, an integrated and mobile labour market within the country. Free mobility of labour corrects several demographic and economic imbalances between states and curbing it will inhibit overall economic growth and employment generation.
- Will increase Informalisation: This move is likely to hurt the low-skilled workers and push the state’s industrial and services sector towards greater “informalisation”. In other words, the same workers will be paid less and have next to nothing social security because they will not be formally on the payrolls
- Gives encouragement to inspector raj & Corruption: The provision in the law that requires a firm to seek exemption from the district administration if it cannot find enough qualified workers brings in an element of bureaucratic discretion in the entire process thus paving way to the old inspector Raj, corruption and rent-seeking.
- Impacts Economic Recovery: The economic recovery (post-Covid) will definitely be affected by these restrictions
- Impacts Investments: The Gurgaon-Manesar belt in Haryana, has attracted high business investments — both in manufacturing and services. Such kind of labour restriction is not in line with free market principles which could hinder investments coming into Haryana
- Competitive Federalism: The move could further affect the competitiveness of Haryana thus diverting away investment and industries into more market friendly states like Gujarat & Karnataka
- Increased Compliance Burden: Under the regulations, firms and companies would also have 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. This is not in line with Union government’s agenda of ease of doing business.
- Impacts all of State’s Labour Market: According to the Union government’s own Periodic Labour Force Survey, nearly 97% of workers in the private sector draw a salary of less than Rs 50,000 a month. So the Rs 50,000 monthly salary limit is quite significant and would cover most of the private sector employment in the state.
- Lacks Consultation: Majority of industry association members criticised the move also on the grounds that they had not been consulted before the announcement of the change.
- Lacks time period for preparation: It is not possible for so many skilled and semi-skilled local workers to become available so quickly. Instead, the government should have been flexible in the implementation of this regulation so that businesses can continue their work “peacefully.”
- Impacts Expansion plans of small firms: Industry Organisation are of opinion that the legislation would damage small firms and halt expansion plans. This will lead to job destruction instead of job creation for locals as nobody will expand operations in the state.
- Against the spirit of free market: This legislation has renewed the debate on whether the government force should private companies to adopt its reservation policy in jobs.
- Questions on Constitutionality of law: While constitutional guarantees for reservation has been limited to public employment (Article 16(4)), attempts to extend it to private sector is contested one. The Constitution has no manifest provision for private employment from which the state draws the power to make laws mandating reservation.
- State abdicating its responsibility: The Constitution places the responsibility of ensuring equality of opportunity to all citizens squarely on the state. By mandating private sector to adopt the reservation policy, the state is delegating its role to the citizen which is criticised by some as abdicating its responsibility
What is the government’s rationale in bringing such laws?
- Needs such policies to achieve substantial equality: With public sector jobs constituting only a minuscule proportion of all jobs, legislators have talked about extending the legal protections to the private sector to really achieve the constitutional mandate of equality for all citizens
- Legitimate Right to ask Private Sector to share Burden: Since private industries use public infrastructure in many ways (infrastructure, subsidised land & credit, etc) the state has a legitimate right to require them to comply with the reservation policy.
- Similar Reservation in Education was upheld: A similar argument was made in requiring private schools to comply with the Right to Education Act, which the Supreme Court also upheld.
- Similar Affirmative Action in other countries: In the US, although there is no statutory requirement for employers to have quotas, courts can order monetary damages and injunctive relief for victims of discrimination(US Civil Rights Act of 1964 prohibits employment discrimination on the basis of race, colour, national origin, religion, and sex). The Employment Equity Act in Canada also protects minority groups, especially aboriginals from discrimination in federally regulated industries, even in the private sector.
- In July 2019, the Andhra Pradesh government had passed a similar law, which was challenged in court. The AP HC had made a prima facie observation that the move might be unconstitutional, but the challenge is yet to be heard on merits.
Read Related Articles