Reservations on hiring

Problems remain in Haryana's modified law

The Government of Haryana’s November 6 notification stipulating 75 per cent reservation for locals in private sector jobs with effect from January 15 next year reflects some of the practical difficulties involved in implementing this politically motivated exercise. Following parleys with state-based entrepreneurs after the law was passed in 2020, the notification has made some significant modifications. The salary cut-off of Rs 50,000 has been lowered to Rs 30,000 and the domicile stipulation reduced from 15 years to five years, suggesting that the pressures of employing locals has been somewhat eased. 

These relaxations do not, however, eliminate the legal and practical difficulties of the law that commentators had raised when it was passed. The Haryana State Employment of Local Candidates Act, 2020, remains in violation of basic constitutional rights such as, among others, right to freedom to reside in any part of the country and practise any occupation or business. No less important is the fact that even these modified conditions in the statute do nothing to enhance the ease of doing business dynamic at a time when attracting investment is becoming critical. No surprise, then, as this newspaper has reported, IT and IT-es firms, the business bedrock of Gurugram, the state’s principal revenue-generating district, are eyeing Delhi and Noida to shift operations. Automobile factories and their component networks, the other key industrial activity in the state, may follow suit for new investments. 

The irony of this modified law is that it is unlikely to assuage the demands of locals or satisfy industry. Its context lies in the violent Jat agitations for government job reservations in Chief Minister Manohar Lal Khattar’s first term. A state law granting a 10 per cent quota for Jats and five other castes in government jobs and educational institutions is held in abeyance, following directions from the judiciary. The new law’s lower salary cut-off will still raise costs significantly for employers. It is no secret that Haryana’s IT and construction businesses and the myriad ancillary industries, and services that have developed around them have been massive employers of Indians from other states, mostly from the east and north-east. This statute diminishes job opportunities for workers from these states in one stroke. Those invested in less mobile capital, such as medium or large factories, may have to raise salaries as they seek to cross the Rs 30,000-threshold to keep essential non-local employees on their books. 

The Act allows employers to hire non-domicile employees if adequate numbers of locals of equivalent qualifications are unavailable for the job. But this exemption can be granted only by a designated officer. The costs of non-compliance are steep too, involving a penalty of Rs 10,000 to Rs 50,000 with additional penalty for every day that the contravention continues. All of this suggests an exponential expansion of the inspector raj. As for the shorter duration domicile rule, this may benefit non-locals who have lived in the state for at least five years. But the problem is that proving this requires a Residence Certificate based on a voter card, Aadhaar or a ration card. Few migrant workers in this income category are likely to have documents registered in the state. All told, this is an illogical legislation to enforce in a state that is suffering high unemployment and urgently requires more investment.