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The governor of Haryana has given assent to the State Employment of Local Candidates Bill, 2020. Its provisions require private companies in the state to offer 75% of new employment to local candidates. Mint decodes the development.

Why did Haryana go ahead with the Bill?

The Bill comes at a time when the state is facing the worst pandemic-led unemployment crisis in the country. Joblessness in Haryana in February was above 26%—ahead of Rajasthan (25.6%) and Goa (21%), according to data from the Centre for Monitoring Indian Economy, which regularly monitors India’s job market. Haryana’s unemployment figures were nearly four times the national average of 6.9% during the month. There is pressure on the state government to show job creation is happening, but jobs are scarce. The state, thereby, wants to discourage the influx of migrants in bottom-of-the-pyramid jobs.

Who will the new quota law impact?

The new mandate covers a range of entities including private firms, societies, trusts and partnership firms operating in Haryana. When enforced, the regulation would require all these entities to offer 75% of new jobs to local candidates with a pay ceiling of 50,000 per month. The ceiling would ensure that all construction workers, blue-collar workers, and indeed all entry-level white-collar workers are covered within its ambit. The Bill, therefore, will impact both manufacturing and services firms. Firms have the flexibility to recruit from all districts of the state—only 10% is mandated from the district where they are located.

The pursuit of jobs
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The pursuit of jobs

Why are employers opposing the law?

Employers, in short, are worried about attitudinal issues among local workers often perceived as inflexible. The industry appears worried about violent flare-ups, as seen in Haryana’s automotive belt in the past. Some segments of the state’s population are struggling with the ongoing transition from farm to non-farm jobs and lack the skills required by the industry.

Will the Bill hold up constitutionality?

Haryana is not the first state to attempt such a quota Bill. In 2019, the Andhra Pradesh legislative assembly passed the AP Employment of Local Candidates in Industries and Factories Bill that also sought to mandate 75% local employment. It has been challenged in the Andhra Pradesh high court. Concerns have now been raised about whether Haryana’s Bill is violative of Article 16 of the constitution. Article 16 is about equality of opportunity for all citizens in matters relating to employment or appointment.

What can private companies now do?

MSME associations and other private firms view the provisions as “politics of appeasement". They are likely to approach the courts to challenge the Bill’s constitutional validity. Technology and BPO firms in Gurugram have perfected the work from home model over the past year. They will continue with this model till such time there is more clarity around the new regulations. Manufacturing firms cannot resort to WFH, but they may not expand in Haryana any further. This doesn’t bode too well for the state’s economy.


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