Job quota for locals: Lessons Haryana and Jharkhand can draw from Andhra

A year and a half since its new law came, Andhra does not seem to have had any troubles. But the case for Haryana, a land-locked industrial state close to four big states, might be different

After the jolt received from the coronavirus pandemic, the Indian economy finally seems to balancing itself on a path to recovery and growth. But the bruises from the fall have left scars in the form of permanent job losses or lower incomes, particularly among those who worked in unorganised and manufacturing sectors. While the Union government handled the situation by channeling some money towards rural jobs and cash support, state governments chipped in with ration support, tax waivers, enhanced health outgo and infrastructure spending.
 
Some states even went a step ahead: They reserved as much as 75 per cent of their jobs for “locals”. Haryana’s law on reserving jobs below a salary of Rs 50,000 per month has got the Governor’s approval, and a similar proposed regulation in Jharkhand might soon be passed by its Assembly. That would make Jharkhand the third state to pass such a law.

 
The first state to enforce a law like that — which commentators called an outcome of short-sightedness — was Andhra Pradesh. Within six months of assuming power as the chief minister, Y S Jagan Mohan Reddy’s government mandated a job quota for locals with certain conditions and relaxations, towards the end of 2019.
 

The example of Andhra Pradesh, therefore, might prove as a beacon for the states that are treading on a similar path.
 
Business Standard spoke to Andhra Pradesh officials who are at the helm of the implementation of this much-discussed law to understand their side of the argument.

 
We found out that the conditions and relaxations under the law actually made it less harsh on companies than expected. For instance, the law does not apply to companies that existed before the formation of the state of residual Andhra Pradesh in 2014 (after Telangana was carved out).
 
Secondly, the mandate required under the law is matched with an assistance from the government in terms of facilitation of skilled workforce. And, the law defines “locals” as those who have been living in Andhra for more than 10 years, irrespective of the state they are domiciled in.
 
Finally, with an attractive offer for investors with a long coastline and robust port infrastructure, Andhra Pradesh is trying to balance the landed benefits with a political commitment to the sons of the soil.

 
The law applies to companies incorporated after 2015
 
The Andhra Pradesh Employment of Local Candidates in the Industries/Factories Act, 2019, exempts those establishments that existed in undivided Andhra Pradesh. “By making it applicable to only those companies that are newly entering Andhra Pradesh, we have made sure that existing companies with a history in this state are unaffected by the legislation,” said an official.
 
Though new projects of big companies are not getting set up with the speed they expect, officials said those who were setting up shop were not finding it difficult to comply. “Kia Motors, for instance, employs more than 80 per cent locals at its Anantapur plant,” said the official quoted above. “Not just that. Take the example of Brandz apparel park. Almost 90 per cent of those employed there are women from adjoining villages. The park employs about 30,000 people.”

 
This provision takes care of the legacy companies and plants, but it may well act as an impediment for promoters looking for land for new projects.
 
Employment facilitation and skill training
 
The newly created department of employment, skills and training was brought into the picture every time a new company approached for the development of a new project, said J V N Subramanyam, the commissioner for industries in the state. “The department engages with the company to help it find the kind of workforce it needs, in the state itself. The government is setting up new skill development colleges, and getting ready for quick response in terms of making skilled personnel available on request of companies,” he told Business Standard.

 
The Anantapur Kia plant began with 65 per cent local workforce, another official said. But the share has now gone above 80 per cent, courtesy the facilitation efforts and the existence of training components attached to the investment process.
 
However, officials did not share any data on the implementation, the extent of compliance, proportion of companies finding it difficult to comply, and so on.
 
As for small companies, most of them already employed local people in a far better proportion, so the state was not worried about MSMEs not complying with this law, officials said.
 
‘New governance structure is efficient’

 
The enforcement of this law is done by nodal agencies at the district level first, before the state-level agency comes into the picture. According to the government order notifying the law, the district collector (or magistrate, or commissioner) chairs the committee, with district employment officer as the convenor member, in addition to the district industry manager.
 
This is the first-in-line agency to monitor the implementation of the law that mandates job quota for local people.
 
The state-level nodal agency comprises the labour and employment secretary to the government, commissioner of industries and the director of the factories department.

 
“If non-compliance gets resolved at the district level, the issue may not even come up to the state level. Only if it gets into a deadlock at the lower level will the state-level agency intervene,” a factories department official said.
 
Further, when it comes to recruiting local candidates, companies are supposed to scout for workers in the local area first, followed by the circle/mandal concerned, and then at the district and later the state levels. But if some companies are unable to find people suitable for the job in the state despite trying for it, the law allows exemption to such companies.

 
Currently, a survey is being carried out to ascertain the share of local employees in factories in the state. A clearer and detailed picture of employment would emerge in a few months, an official said.