- Haryana job reservation bill mandates hiring 75% locals for jobs under Rs 50,000 per month
- Experts feel it is a populist measure to appease vote bank
- It will increase cost of compliance for firms and force them to move to neighbouring Noida
- It will impact jobs in operations, administrative roles and entry-level positions across sectors
- The proposed bill is likely to be challenged as it goes against the spirit of the Constitution.
In times when public discourse is replete with initiatives like 'one nation, one tax', 'one nation, one identity', 'one nation, one ration card', to establish India as a single market, the recently passed bill by the Haryana government for reservation of local candidates seems to be populist and bizarre at best.The Haryana Assembly passed a bill that mandates private sector firms, based in the state, to reserve 75 per cent of their jobs, that pay less than Rs 50,000 a month, for local candidates. The bill is awaiting the assent of the governor of the state to become a law.
"Introduction to GST was a big step towards creating India as a single market. Even the recent bills that have created some controversies, like the farm sector bills are geared towards that," says Partha Chatterjee, Professor and Head of the Economics Department at Shiv Nadar University, Greater Noida.
Eliminating barriers across the country will definitely be beneficial and the proposed legislation is a retrograde step in that sense. "Such bills, like the one passed by the Haryana Assembly, which are geographically restrictive, go against that and can harm the Indian economy, particularly now when we are seeing a bit of recovery, which is still very fragile," says Chatterjee.
This legislation is proposed against the backdrop of the migrant labour crisis that made headlines during the pandemic and also the state's high unemployment rate. According to the Centre for Monitoring India Economy, in October, Haryana's unemployment rate was 27.3 per cent when the national average was 6.98 per cent.
This move seems to arise from the government's inability to create jobs so it is using its power to enact and make regulations, says K.R. Shyam Sundar, labour economist, and professor at XLRI Jamshedpur.
He adds, "This is a short-sighted and ill-informed economic strategy. It assumes that locals have the necessary skill-sets, which is a false assumption. This will also increase the cost of skilling the workers, which will most likely shift on the private sector."
It will also add to unnecessary confusion and regulatory burden for companies. Haryana gets workers from several of its neighbouring states such as Punjab, Bihar, Madhya Pradesh, Rajasthan, etc who move from one state to another in search of better opportunities.
"Megacities such as Delhi, Mumbai, Gurgaon have been formed on the back of people from other cities where opportunities are limited. It will limit recruiters' ability to hire the best person for the job and is against the principles of free-market that allows any Indian to work anywhere in the country," says Aditya Narayan Mishra, CEO, CIEL HR Services.
"The legislation, if passed, also goes against the country's narrative of ease of doing business. It will add another layer of compliance and will make it difficult for HR managers or recruiters to determine who is from which state, making it difficult to implement," says Mishra. This will also lead to job seekers look for alternative ways to create identity proofs with a local address. According to the proposed legislation, a local candidate is one who is domiciled in the state, that is, one who is born there or has lived there for 15 years.
In times when talent is the biggest competitive advantage, companies will also look for ways to bypass this legislation. Many are amid reviewing their work from home strategy, and renegotiating real estate deals as they plan to open up offices next year. So, companies will be careful not to plan expansion in Haryana and will likely move to Noida, says Kamal Karanth, Co-Founder of Xpheno, a specialist staffing company.
While it will not impact high-end jobs that are above Rs 50,000 per month, it will have a strong impact on lower-end jobs, adds Karanth. The proposed legislation states that it will not affect existing employees but it is likely to impact future hiring plans for firms.
"Monthly salary of Rs 50,000 is quite a wide threshold and will cover a huge base of employees not just in manufacturing jobs in factories but also in administrative, operations and other junior roles," says Atul Gupta, an employment lawyer and partner at law firm Trilegal.
He adds, "The legislation is discriminatory in nature and is pushing forward the narrative that India is not one country but many different countries. It is likely to be constitutionally challenged because it impairs the ability of other citizens to be gainfully employed in the state of Haryana."