Updated: March 5, 2021 9:55:56 am
Haryana’s law making it mandatory for private sector firms in the state to reserve 75% jobs with a monthly salary up to Rs 50,000 for locals comes amid a rising unemployment curve and shrinking work opportunities in the government.
Data compiled by the Centre for Monitoring Indian Economy shows that Haryana’s unemployment rate has been far in excess of the national average since August 2017. It reached a peak in April 2020 when four out of every 10 people looking for a job failed to get one.
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Worse still, as the Covid-induced lockdowns have been removed and the economy opened up, Haryana’s unemployment rate has continued to be high and is still rising.
Both these trends explain why the BJP government in the state may have chosen to go ahead with this law. In the run-up to the Assembly polls in October 2019, the ruling BJP had committed to providing special benefits to those industries that provided more than 95% employment to locals.
However, this latest push aimed at allaying the massive jobs crisis is likely to be counter-productive. “The move is purely populist and political in its objectives,” said Naushad Forbes, co-chairman Forbes Marshall, former president CII, and Chairman of Centre for Technology Innovation and Economic Research and Ananta Aspen Centre.
“What’s more, it is unfortunate because it is the exact opposite of what you need to do to attract employment and investment in your state,” he said.
According to the Union government’s own Periodic Labour Force Survey, nearly 97% of workers in the private sector draw a salary of less than Rs 50,000 a month. So the Rs 50,000 monthly salary limit is quite significant and would cover most of the private sector employment in the state.
Haryana is not the first state to introduce such a law. Andhra Pradesh did in 2019 but it has not been implemented as yet after it was challenged on constitutional grounds.
“The fact is there is no constitutional basis for such reservations. That is why even though several states and leaders such as former UP chief Minister Mayawati have contemplated it but never went through with it,” said Ravi Srivastava, Director, Centre for Employment Studies at the Institute of Human Development.
But even more importantly, Srivastava said, “this would lead to balkanisation of India’s labour market”. Free mobility of labour corrects several demographic and economic imbalances between states and curbing it will inhibit overall economic growth and employment generation.
Even within Haryana, Srivastava said, this move is likely to hurt the low-skilled workers and push the state’s industrial and services sector towards greater “informalisation”. In other words, the same workers will be paid less and have next to nothing social security because they will not be formally on the payrolls.
Observers believe this law is only for optics — “to counter the opposition,” as Forbes said. But the mere existence of such laws could open the door to corruption and rent-seeking.
“Often such laws and provisions are followed more in the breach. The obvious flip side is the rise in licence permit raj and associated corruption, thanks to massive discretion available with government officials,” said Srivastava.
Another reason for the push, Srivastava said, could be the fact that government jobs, while enjoying great attention, do not account for more than 2.5%-3% of the total non-farm paid employment. “Public employment has been coming down since the mid-80s,” said Srivastava and that is why the focus of reservations is now shifting to the private sector.
Experts said that while the implications of such a law would be similarly adverse if any state, such as UP or Bihar, such restrictions are more troublesome when a state like Haryana does it.
That’s because Haryana, and especially the Gurgaon-Manesar belt, has attracted high business investments — both in manufacturing and services. It has been a centre of job creation for the nearby states, soaking up labour from contiguous states to provide services that were not possible earlier.
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