Ill-advised move

| Updated on March 05, 2021

Haryana’s jobs-for-locals law is legally and economically unsound

Haryana might just have jeopardised its future as one of India’s leading States by enacting the Haryana State Employment of Local Candidates Act, 2020, which reserves 75 per cent of private jobs with a salary of below ₹50,000 for ‘sons-of-the-soil’. Like the jobs-for-locals law passed by Andhra Pradesh in 2019, which its High Court said ‘may be unconstitutional’, the Haryana law too is open to legal challenge. It runs the risk of being struck down for being violative of Article 14 (right to equality), Article 16 (equality of opportunity in employment) and Article 19 (the clause pertaining to freedom of movement). The 2017 Report of the Working Group on Migration cites the Supreme Court ruling in Charu Khurana vs Union of India and others (2014) to observe that “restrictions based on residence for the purposes of employment (are) unconstitutional”. What’s disturbing is that Maharashtra, Karnataka, Telangana and Madhya Pradesh have expressed similar intentions. Karnataka seems to have developed second thoughts; in Maharashtra, sons-of-the-soil politics has been around for decades. Telangana has so far refrained from passing a law. It has instead suggested a coordinated approach with industry to create local skilling capacities. It is hardly surprising that industry is worried about the impact of Haryana’s labour rules on the IT and automobile sectors in Gurugram and Manesar, besides the industrial hubs of Rewari and Bahadurgarh. Ironically, industry was desperately praying for the return of migrant workers from Uttar Pradesh, Bihar and Odisha after the lockdown was lifted. It is obvious that the local labour market cannot close the gap.

Economic productivity depends on the free and efficient allocation of labour and capital. It is inexplicable that governments should focus on ease of mobility with respect to allocation of capital — making clearances simpler, rolling out tax incentives, easing availability of finance, smoothening bankruptcy procedures — but impose shackles on labour. Indeed, the jobs-for-locals law may give rise to new labour inspector raj. It will lead to labour shortages in some regions and unemployment in others, creating distress in regions where families depend on remittance incomes. An economy struggling to shake off the pandemic can do without these shocks.

To be sure, States are responding to a political economy problem — the impact of rapid development of places such as Gurugram or Bengaluru on displaced agrarian populations, who feel excluded from the process. But for inclusive development, the capacities of these populations need to be scaled up, with the States and industries investing in their education and training. Labour market nativism cannot be justified, in law or in economic terms.

Published on March 05, 2021

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