Local Reservation in Employment: Political Brainwashing or A New Approach to Unemployment

 · Haryana is the newest state to try and implement a law for local reservation of jobs in the private sector residing inside the state.

· The new law states that 75% of the jobs across the state which pay upto 50,000 rupees per month

· This move is in line with similar proposals of different states such as Maharastra, Andhra Pradesh and Karnataka.

· Andhra Pradesh was the first state which tried to pass such amendments but was called up in the High Court for being unconstitutional

In the wake of rising unemployment across different states partly due to the pandemic and the long term issues of employment generation in comparison to the steep rise in population finally catching the attention of different legislatures. However, is providing local reservation in employment just another political stunt to get more votes with minimal genuine effort or may actually prove to be a solution for the short term?

The answer to this question requires us to get to the base of the employment problem faced by these states and also look at the visible pattern of this trend being followed by developed states. It is quite easy to point out that all of the states trying to bring local reservation for employment in all sectors are facing inflated unemployment rates, for example, Unemployment rate in Haryana was 26.4% during FY 2019-20 which is thrice the national average.

It can be understood that these measures are a way for the governments in these states to avoid the main issue of unavailability of training center's and high quality education spread throughout the state instead of some hotspots and a high standard of candidates for jobs across the state. It is also seen that these states have had a major rise in private institutions for education which often fail to provide the required level of skills and education demanded by most employers. Many of the industry leaders say that the reason they are reluctant in employing the local residents is there lack of accountability and skills required for the job. In Maharashtra, it was seen that even though WFH picked up pace and even though the industrial sector lacked workforce, they still didn’t prefer employing Marathi's. According to The Print, employers believe the local workers lack work discipline, are unwilling to learn new trades, are inclined towards political and trade unions — seen as pressure tactics by businesses — and are insistent on the implementation of the reservation quota.

 So it is quite clear at this point that providing better facilities for skill development through the establishment of training centres for industry specific skills and provide businesses with better suited candidates for employment.

 How do these steps affect the businesses?

With the advent of this step in Haryana, it will adversely affect the state’s position as a major influence in the production and services sector of the country. Gurugram, which is on a trajectory to become an IT-BPM (Information Technology and Business Process Management) hub of the country will suffer with local reservation.

Local reservation will also push away new businesses as the quality of workforce offered in the local population does not fulfil the requirements of many companies and other businesses.

Haryana has 300 Fortune 500 businesses, most of which are spread in or around Gurugram. A recent survey conducted by Nasscom has found that many of these firms are considering relocating to other states and moving their operations away from Haryana after the local reservation measures. The state is home to not only IT and ITes firms but a large number of auto and ancillary companies which are equally unhappy over the decision. This will prove to be harmful for Haryana as many new states have started attracting investment by businesses through liberal laws, more incentives from the government and greater flexibility in taxes. The Nasscom report stated, “Extrapolating to 4 lakh IT-ITES employees, the act will impact about 1.5 lakh current jobs (37 per cent of all the IT-ITeS jobs). Given that the act applies to new hires, the impact is expected to be severe in 1-2 years as the industry sees a high attrition rate” and hence would be detrimental to an already meagre employment rate present in the state for graduates and post-graduates. 

What the companies actually want 

Most companies have come out and slammed the government for such a step and advised that developing the education infrastructure across the state and putting emphasis on skill development should be carried out by the government and such steps will result in long term benefits for the state in terms of employment rates across the state.

To say that unemployment has a stake in political results across the country would be an understatement, India’s population is one of the youngest in the world and the youth requires employment. Such steps as local reservation are just a mirage to hide unemployment in states. The route to follow for all states is not to just implement steps for short term political gains but to improve the overall standards of workers and job seekers to increase investment by business houses in their respective states.

- Mayank Mishra 



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