Job Quota in Private Sector: Vote Bank Politics or a Boon to People?
Updated: Feb 21
The job protection agenda for locals is rearing its head again in India. On November 5, 2020, the Haryana Assembly passed a bill that stated that 75% of the seats in the private sector with a monthly salary of fewer than 50,000 rupees should be reserved for local candidates. The quota is applicable to all private enterprises which employ more than ten people. If the enterprises do not follow this quota then strict fines can be imposed on them. In India, this is not the first time that such a quota has been brought up, with many states having already implemented it earlier.
Maharashtra, in the year 2008, introduced 80% reservation for locals in industries that seek state incentives and tax subsidies, but it could not bring any credible evidence on the number of jobs created. Gujarat introduced 85% reservation for locals as far as back as 1995, but it was never enforced either in public or private sectors. Tamil Nadu’s Industry minister once announced that the state would ensure at least 50% reservation of jobs for residents of the state. Andhra Pradesh Assembly passed legislation that reserves 75% of industrial jobs in the state for locals. All these restrictions remained only on paper due to lack of implementation.
Rationale and the Impact of Private Quota
The job quota legislation has been introduced for many reasons. First, due to the economic sluggishness and lack of enough jobs in the market. Secondly, due to vote bank politics. This type of quota also has far-reaching impacts. First, it leads to a reduction in job creation as industries prefer to operate outside states with such restrictions. Secondly, the ease of doing business is affected which hampers the growth and development prospects of the respective state. Finally, the risk of labor shortage increases, which can trigger a rise in unemployment and aggravate wage inflation. The best way to grow out of this quota is to ensure economic recovery and provide enough job opportunities for the youth. Skill-based training and proper education should be the key focus for the states to prepare their people to compete in the free market. The education sector should receive more investment. Job reservations for locals lead to the cheap popularity of the party, but sadly this fails to address the real problem: the failure of creating quality jobs. Haryana passed this bill because of the vote bank politics of Dushyant Chaula, who promised to pass the quota for locals. This law can kill off industrial and economic growth in one of the country’s thriving manufacturing and service sector hubs. At an operational level, the quota prevents private industries from hiring the best talent that offers itself to fill any job vacancy- it must settle for the second-best or even further inferior talent the local candidate can offer. The private industry also loses out on precious time and money to verify the credentials of local candidates against the outsiders. Further, the law calls for tedious compliance requirements and gives the civil servants an extraordinary amount of discretionary power to exempt a company from hiring as per the local quota mandate.
Future of the Private Quotas
The quota for locals violates the spirit of the Constitution of India, which seeks to build a unified nation. The quota for locals violates Article 14 which guarantees equality before the law and Article 19 which guarantees the right to work anywhere in the country. A 75% quota for locals would discourage investors and dampen job creation in the state. It may also prompt other states to implement similar policies, hurting labor mobility and creating an artificial shortage of talent. Recently the Automotive Component Manufacturers Association urged the Haryana state government to reconsider the bill for reservation of employment for locals in private enterprises. The association said such a move would affect the ease of doing business. The netas have converted reservations into a circus. The very purpose of the quota has become divisive and self-defeating. In fact, whether there should be reservation in the private sector or not is a debate that refuses to end. With the country always in ‘election mode’, politicians across the spectrum have kept the fire of reservation and quotas burning. Some opine that the idea should be given a quiet burial, as it is forcing corporates to recruit people based on family, state, or community ties. With public sector companies either closing down or being sold off, few jobs are created in the public sector and politicians now want to exploit the private sector to help them in handling their dole and keep their vote bank satisfied. Many in the corporate sector have said that this is not the right time to put such constraints. The private enterprises may even shift their bases to states which have friendly policies. The Haryana government should roll back these quotas, otherwise, it might be a big problem for them to woo investors in the near future.
By Souvik Biswas (Guest Writer)
Souvik is a first-year History Hons student at Hindu College. He is a writer and coordinator of The Statesman paper Kolkata edition. He is a bibliophile and cinephile, hate billionaires and dreams of a casteless and classless society.