Should there be job reservations in pvt sector?

DEBATE

D Mukherjee, MoP, Rajya Sabha (left) &
S S Bhalla, Director, Oxus Invests Pvt Ltd

Dipankar Mukherjee
Member of Parliament
Rajya Sabha

A nation sets up its own industry not just for profits. There is always a larger social goal behind every economic activity.

Unfortunately, this basic concept of a welfare state is being challenged by global finance capitalists and their associates in developing countries like India. Attempts are being made to give priority to the benefit of a handful instead of prosperity for the majority of the people.

For instance, the mineral wealth of India lies in its tribal belt. The first thing that any industry, public or private, would do to start mining is to displace the tribals from their ancestral land.

In the public sector, they may at least think themselves to be the owners of the produce because it is under parliamentary control through their elected representatives and the state is the owner of industry.

They have reservations for jobs according to constitutional provisions in the public sector to ensure their participation in different stages, from the grassroot level to the policy making forum.

But in the private sector, there is no such constitutional compulsion and the land and labour are utilised to make an entrepreneur richer with no guarantee that the tribal who owns the land or the dalit whose labour went into the mining process would get a share through a job in the company.

It is almost like someone asking you to get out of your house so that they can dig for gold while you are being made to beg outside what was once your own house.

The discussion on reservation in the Indian private sector began in the 1950s but not one entrepreneur volunteered to ensure workplace diversity.

Even in the US, companies like General Motors and Ford have systems in place to employ African Americans, Asians and so on. There, every company that produces material procured by the government has to have workplace diversity.

In the public sector, this social responsibility was partly discharged through job reservations. The technical efficiency in the case of the public sector was also coupled with allocative efficiency in terms of social justice. Even so, they were able to compete globally as can be seen from the performance of public sector corporations like Bhel, ONGC, NTPC, IOC and so on.

Fair competition in a mixed economy means that the public sector and the private sector should have a level playing field. When the public sector is being asked to discharge its social commitment through the reservation of jobs, there is no reason why similar conditions should not apply to the private sector that has been given a lot of concessions by the government to enhance industrial growth.

Everybody knows that our private sector takes a lot of money from public sector banks and financial institutions, and there is a huge default in loan repayment and taxes. Those whose land, labour and capital are being used by the Indian entrepreneurial class can definitely seek some modicum of equality in job distribution.

Under the circumstances, to call upon only the public sector and government departments to discharge their social commitment, keeping the private sector insulated from the national goal of evolving social justice, would be contrary to one of the basic principles of governance in the country "" to provide full equality of opportunity in employment for scheduled castes, scheduled tribes and other backward castes.

The Indian private sector should try to understand this basic idea behind the concept of social justice so that the partnership in entrepreneurship that it is clamouring for is matched by its action in partnering the objective of social justice, too.

The president's address showing government's sensitivity to affirmative action on reservation in the private sector "" through dialogue with political parties, industries and other bodies on how best the private sector can fulfill the aspiration of scheduled castes and scheduled tribes "" is, therefore, a step in right direction and the private sector should offer its cooperation in a positive manner.

Surjit S Bhalla
Director,
Oxus Investments Pvt Ltd

Both the human-faced Common Minimum Programme (CMP) and President Kalam's speech are emphatic about reducing poverty, corruption and job discrimination in India.

These documents are so syrupy that it is difficult to objectively unglue oneself from the trite but oh-so-politically-correct messages. If the documents only talked of intention, they could be ignored. But they go much further.

For instance, the President's speech outlines legislative plans: "The government is sensitive to the issue of affirmative action including reservations in the private sector... Reservation quotas in government, including those relating to promotions will be fulfilled in a time-bound manner. To codify all policies on reservations, appropriate legislation will be enacted."

Two important issues are involved. First, the right of every polity and government to seriously address the problems of social injustice. In this regard, it is economic backwardness that matters and not caste or sex.

All people should get the benefit of government policy. The second issue pertains to discrimination in the job market. When this occurs, it is the case that those practising discrimination are incurring a loss by doing so.

In other words, they are hiring a caste or sex rich person, and paying such person a higher productivity adjusted wage. The firm could hire an equally productive but caste or sex poor candidate (for instance, an SC/ST person or a woman) at a lower wage.

The firm chooses to incur this extra cost wilfully because presumably it gets utility from being casteist, racist or sexist. In a democratic society, such utility gains cannot and should not be tolerated.

But how best is such a situation tackled? There are two approaches: first, legal and the second, by force of government.

The former is what is practised in enlightened societies like the US; the judicial system decides the occurrence of discrimination and in due course of time, the practice of such discrimination is eliminated.

Lawsuits presuppose that there is a pool of qualified applicants, that is, with the same education and ability. Such may not be the case in some societies and it is instructive to look at the "best practices" prevailing in these societies.

For example, in the mid-1970s, Malaysia (with about 55 per cent indigenous Malay population, 33 per cent population of Chinese origin and 12 per cent of Indian origin) was faced with a lopsided situation in terms of availability of educated labour "" the Malays had considerably lower education than either the Chinese or the Indians.

The government could have taken the route of implementing job reservations in the private sector, but it chose not to do so. Instead, the policy was first to increase the education levels of the Malays to bring them at par with the rest of the population; in parallel, job quotas were introduced in the public sector.

Just 15 years later, Malays had the same education profile as non-Malays. "Affirmative action" policies were tackled in the long-term (10 to 15 years) via education and in the immediate short-term via quotas for educationally-qualified Malays, through the public sector.

As far as I know, the policy of job reservations in the private sector has not been initiated anywhere (other than, perhaps, Mugabe's dictatorship in Zimbabwe).

There are good moral, legal and ethical reasons why the CMP-advocated policy has not been adopted anywhere else in the world. Such a policy is unfair to all other citizens; and the rights of other economically-backward people (Muslims, Hindus, non SC/ST castes) are ignored with no basis.

What can constitute desirable (short- and long-term) "affirmative action" policies? First, financial support for those in the bottom 40 per cent of the population to attend educational institutions, all the way to the post-graduate levels.

Second, the government, if it deems desirable, can put in place "guidance quotas" for minorities in the public sector; but it should ensure such quotas are there for all those discriminated against "" women, Muslims and SC/ST.

Third, it should refrain, under all circumstances, from enforcing such guidance on the rest of the population. Such a policy will go a long way towards economic development according to Indian principles, rather than the adoption of "in the face only" policies advocated by the CMP.