Jobs for locals
Haryana Ordinance will hurt workers and investment
On Monday, the Haryana cabinet approved a proposal to draft an Ordinance that would reserve jobs for “locals” in the private sector. The Haryana State Employment of Local Candidates Ordinance, 2020, is to provide a whopping 75 per cent reservation for locals in new jobs within the state in private concerns, subject to certain riders. These include that the new jobs should have a salary of under ~50,000; and that the company itself should have more than 10 people. The coalition government in power in the state, although led by the Bharatiya Janata Party Chief Minister Manohar Lal Khattar, also includes the Jannayak Janta Party of the Deputy Chief Minister, Dushyant Chautala, and job reservations for locals has long been a demand of the party.
This is part of a worrying trend. India’s development is regionally unbalanced, as is the case with all large developing countries. The natural operation of economic growth, which creates clusters of fast development and takes advantage of returns to scale, tends to ensure that jobs are created in specific advantaged parts of the country. In order to share the benefits of this development, those jobs must similarly benefit those from all over the country. Thus, internal migration for jobs in the urban sector has long been central to the notion of development. In India, too, internal migration has taken hold in recent decades. Many individuals leave the states in which they were born in order to find employment elsewhere. For labour surplus states like Uttar Pradesh and Bihar, this is sometimes the central way in which they get to participate in India’s growth story. Discrimination against migrants in jobs creates problems for the development process, and not incidentally leads to political ill-feeling.
It is also bad for investors. If nothing else, this is now an additional form of paperwork and compliance being imposed upon job creators in Haryana at a time when private investment is at a low and the virus and the lockdown have devastated India’s economy. A government concerned about the ease of doing business, as Haryana’s has claimed to be in the past, should not have put such an onerous and unnecessary additional criterion on potential investment into the state. Corporations that might have chosen headquarters in Gurugram will now think twice. The deputy chief minister warned that the new Ordinance “would have the toughest rules as those industries or units that hide the information about the employees, would face severe consequences”. These would include hefty financial penalties and daily fines. For investors, such a well-publicised, intrusive, emotive, and politically-sensitive new regulation might well prove to be a deal-breaker. Further, there are the ripple effects to be considered. Today it is Haryana — tomorrow it may be Maharashtra or Tamil Nadu. Karnataka has already made noises to this effect. India’s labour market cannot be balkanised in this manner, and the rights of its workers cannot be circumscribed. This is not China, where internal migration is subject to the will of an authoritarian state. Such a sensitive interstate matter must be taken up at the level of the Union of India — through an appropriate federal intervention, such as an inter-state council.