Haryana Law on Local Hiring

In News

• The Haryana State Employment of Local Candidates Act, 2020, provides 75% reservations to local people in private-sector jobs.
  • This reservation is only applicable for jobs that offer a salary of less than Rs 30,000 a month. 
• The law can trigger an exodus of large domestic and multinational investors across various sectors.

About Haryana State  Employment of Local Candidates Act, 2020

• The law covers the whole of the State and will be in effect for 10 years.
• It will be applicable to: 
  • all the Companies, Societies, Trusts, 
  • Limited Liability Partnership firms, Partnership Firm,
  • any person employing ten or more persons and 
  • an entity, as may be notified by the Government, from time to time.
• The compliance time period would be 3 months.
• In the case of non Compliance, a fine between ?25,000 and ?1,00,000 would be levied.
• The benefits of the law could be availed by those who have the domicile.
  • The candidates need to register on a designated portal from which recruitments will be done.

Need of Reservation for Locals in Private Job

• High Unemployment rate:
  • As per the Centre for Monitoring India Economy, in February the unemployment rate in Haryana was over 26%.
    • Against a national average of less than 7%.
• Loss of Livelihood of Locals:
  • With the growth in industries, the pressure of displacement is always on the locals 
  • They suffer due to land acquisition and loss of agricultural opportunities.
  • It was the argument forwarded by Andhra Pradesh.
• Prime Victims of Pollution:
  • The locals are the first victims of pollution or industrial hazards and hence they should have first right over jobs.
• Reservations are granted on other Grounds like Caste, Gender:
  • The locals who suffer from industrialisation also need to be brought into the net of positive discrimination.
• Responsibility of Democratic Government towards their Citizens:
  • The objective is to empower the local youth by giving them better jobs.
• National Monetisation Pipeline (NMP):
  • Rising privatisation and a push for NMP, such legislation would be a windfall.
  • The private sector uses public infrastructure in many ways like subsidized allotment of land, tax exemptions etc. 
  • The state has a legitimate right to require them to comply with the reservation policy.

Constitutionality of the Law

• Private sector can challenge the law’s effectiveness as it interferes with their constitutional rights to carry on their trade freely.
  • Violation Of Article 14 
    • Which ensures equality before the law or the equal protection of the laws within the territory of India.
  • Articles 16(1) and 16(2)
    • It prohibits the state from discriminating against any citizen on grounds of religion, race, caste, sex, place of birth.
•  State governments have time and again given the following arguments.
  • Article 16(2)
    • As the language is not mentioned as criteria of non-discrimination, states have mandated knowledge of State Language.
  • Constitution Talks about Government Jobs
    • As per Haryana Government, the law is constitutional as it deals with jobs in Private Sector.

Judicial verdicts

• Dr Pradeep Jain v Union of India, 1984:
  • Legislation for “sons of the soil” was termed unconstitutional but did not expressly rule on it as the case was on different aspects of the right to equality.
• Sunanda Reddy v State of Andhra Pradesh, 1995:
  • The Supreme Court asked to strike down the policy that gave 5% extra weightage to candidates who had studied with Telugu as the medium of instruction.
• Appointment of Government teachers in Rajasthan:
  • The Supreme Court invalidated the appointment of government teachers in Rajasthan in 2002 
  • In which the state selection board gave preference to “applicants belonging to the district or the rural areas of the district concerned”.
• UP Subordinate Service Selection Commission case :
  • In 2019, the Allahabad High Court struck down a recruitment notification by the UP Subordinate Service Selection Commission (UP SSSC).
  • The UP SSSC notification prescribed preference for women who are “original residents” of the UP alone.

Global Practice

• Many countries allow such reservations in private jobs. 
• The US Civil Rights Act of 1964 allows the courts to order monetary damages and relief, for victims of discrimination (local people).
• The Employment Equity Act in Canada also protects minority groups from job deprivation. 
  • Protecting natives from discrimination in all the federally regulated industries, even in the private sector.

Criticism

• Poor Ease of Doing Business:
  • Companies and Assocham have raised concerns regarding difficulties in hiring the right talent at the right pay due to such steps.
• Profit Margins shrink:
  • Due to Suboptimal Human resources, productivity and profit margins go down.
  • Companies may move out or not invest any further thus causing even more job loss for locals than before.
• Losing the global race:
  • The reservation will result in moving out of tech and automotive companies.
  • Imposing the reservations on gig and platform companies could create a crippling talent crunch.
• Lesser Tax Collection:
  • The tech giants and other industries may be forced to shift their base from Haryana to other States 
  • Which would drain out the State’s monetary resources to that extent
• Domino effect: 
  • If other States take Haryana’s cue and follow suit, there would surely be an extreme level of talent crunch across industries and the country.
  • We have already lost out to Sri Lanka and Bangladesh in textiles.
  • MNCs moving out of China have not come to India but shifted to Vietnam, Indonesia, Thailand, Sri Lanka and Bangladesh
• Threat to unity:
  • Raising the son of the soil issue and preventing free movement of manpower resources in the State 
    • Is sure to have a tremendously adverse effect on the existing industries in the State.
  • This step would create friction among citizens.
• Against constitutional provisions:
  • These laws are against Articles 14,16 and 19 that provide fundamental rights to Indian citizens to work anywhere in the country.

Way Ahead and Conclusion

• The Economic Survey 2016-17 highlighted 
  • that annual work-related migration increased to around 9 million. Thus benefiting the Economy.
• Draft national policy on migrant workers says 
  • Migration should be acknowledged as an integral part of development.
  • Government policies should not hinder but seek to facilitate internal migration.
• Report of the Working Group on Migration by the then Ministry of Housing and Urban Poverty Alleviation. 
  • It argued that the movement from agriculture to manufacturing and services is inherently linked to the success of migration in the country.
  • Thus, Such policies would prevent us from optimally harnessing the demographic dividend and thus end up promoting Regional Inequality.
• Reservation as last Resort
  • First, the options to increase the number of Jobs should be explored.
  • The reservation, if any, should begin from 20%­- 25% as technical and specialised skill sets will take time to inculcate among the State’s youth
• Incentivising the industries
  • The government may offer financial incentives to industries that invest in training local youths.
  • Such incentives could take the shape of human capital for the better.

Source: TH